Evaluation of the Project Development Assistance ......TA – Technical Assistance UPT – Urban...

Evaluation of the Project Development Assistance implemented under the Intelligent Energy Europe

Final Report Final version

Report delivered to:

DG ENERGY

Directorate C - Renewables, Research and Innovation, Energy Efficiency

C.3 - Energy efficiency

in the context of the

Specific contract n° ENER/C3/2013-426

under

Service Framework Contract ENER A2 360-2010

February 15 th, 2016

Evaluation of the Project Development Assistance (PDA) implemented under the Intelligent Energy Europe

Final report PwC Page 2 of 120

The information and views set out in this report are those of the authors and do not necessarily reflect the official opinion

of the Commission. The Commission does not guarantee the accuracy of the data included in this study. Neither the

Commission nor any person acting on the Commission’s behalf may be held responsible for the use, which may be made of

the information contained therein.



DEFINITIONS AND ABBREVIATIONS

BPCE - Banque populaire et la Caisse d'épargne

CEB – Council of Europe Development Bank

CHP – Combined Heat and Power

CIP – Competitiveness and Innovations Framework Programme

CO2 – Carbon Dioxide

CoM – Covenant of May or

CSF – Community Support Framework

CSP – Concentrated Solar Power

DG ENER - European Commission Directorate General Energy

EACI (Executive Agency for Competitiveness and Innovation) now EASME (Executive Agency for Small

and Medium-sized Enterprises)

EBRD – European Bank for Reconstruction and Development

EC - European Commission

EE – Energy Efficiency

EED – Energy Efficiency Directive

EEEF - – European Energy Efficiency Fund

EIB – European Investment Bank

ELENA – European Local Energy Assistance

EPC – Engineering Performance Contracting

ERDF – European Regional Development Fund

ESCO – Energy Serv ice Company

ESIF - European Structural and Investment Fund

ETS – Emission Trading Scheme

EU – European Union

FP – Framework Programme

GHG – Greenhouse Gas

HF – Holding Fund

ICT – Information and Communication Technologies

IEE – Intelligent Energy – Europe

JESSICA – Joint European Support for Sustainable Investment in City Areas

KfW - Kreditanstalt für Wiederaufbau

kWh – kilo Watt hour

LB – Local Banks

MEs – Managing Entities (EIB, CEB, KfW, EBRD, EASME)

MEUR – Millions of Euro

MFF - Multiannual Financial Framework

MLEI – Mobilising Local Energy Investment

MWh – Megawatt hour

NPV – Net Present Value

PDA – Project Development Assistance

PDS – Project Development Service

PFI - Participating Financial Intermediaries

PFIs – Participating Financial Intermediaries

PV – Solar Photovoltaic

RE – Renewable Energy

RfS – Request for Serv ices

SEAP – Sustainable Energy Action Plans

SMART - Specific, Measurable, Achievable, Realistic and Time -bound

TA – Technical Assistance

UPT – Urban Public Transport





Contents

Abstract .................................................................................................................................................. 11

1 Introduction..................................................................................................................................... 12

1 .1 Background and reference context ........................................................................................................ 12

1 .2Evaluation objectives............................................................................................................................ 13

2 Methodological and empirical approach ...................................................................................... 17

2.1Overv iew ............................................................................................................................................. 17

2.2Data collection ..................................................................................................................................... 17

2.2.1 Main strategy ........................................................................................................................ 17

2.2.2 Main purposes....................................................................................................................... 17

2.2.3 Desk research ........................................................................................................................ 18

2.2.4 Direct interv iews to Managing Entities .................................................................................... 18

2.2.5 Site v isits............................................................................................................................... 19

2.2.6 Second stage of interviews ...................................................................................................... 21

2.2.7 Survey................................................................................................................................... 23

2.3Evaluation ........................................................................................................................................... 25

2.3.1 Main evaluation questions...................................................................................................... 25

2.3.2 Evaluation process and instruments........................................................................................27

3 Evaluation results........................................................................................................................... 30

3.1Presentation of the evaluation results ....................................................................................................30

3.2Aggregated evaluation of the PDA programme .......................................................................................30

3.2.1 Impact/Achievements ............................................................................................................ 31

3.2.2 Relevance.............................................................................................................................. 58

3.2.3 Effectiveness and Efficiency.................................................................................................... 62

3.2.4 Sustainability ........................................................................................................................7 2

3.2.5 Coherence and Sy nergies........................................................................................................7 5

3.3Evaluation of MLEI-PDA ...................................................................................................................... 77

3.3.1 Brief description of MLEI-PDA’s features ................................................................................ 77


3.3.3 Relevance..............................................................................................................................7 9

3.3.4 Effectiveness and Efficiency....................................................................................................7 9

3.3.5 Sustainability ........................................................................................................................ 82

3.3.6 Coherence and Sy nergies........................................................................................................ 82

3.4Evaluation of EIB-ELENA .................................................................................................................... 83



3.4.1 Brief description of EIB-ELENA’s features............................................................................... 83


3.4.3 Relevance.............................................................................................................................. 85


3.4.5 Sustainability ........................................................................................................................ 88

3.4.6 Coherence and Sy nergies........................................................................................................ 88

3.5Evaluation of KfW-ELENA ................................................................................................................... 89

3.5.1 Brief description of KfW-ELENA’s features.............................................................................. 89

3.5.2 Impact/Achievements ............................................................................................................90

3.5.3 Relevance.............................................................................................................................. 92


3.5.5 Sustainability ...................................................................................................................... 102

3.5.6 Coherence and Sy nergies...................................................................................................... 102

3.6Evaluation of CEB-ELENA.................................................................................................................. 102

3.6.1 Brief description of CEB-ELENA’s features............................................................................ 102

3.6.2 Impact/Achievements .......................................................................................................... 103

3.6.3 Relevance............................................................................................................................ 104

3.6.4 Effectiveness and Efficiency.................................................................................................. 104

3.6.5 Sustainability ...................................................................................................................... 105

3.6.6 Coherence and Sy nergies...................................................................................................... 105

3.7Evaluation of EBRD-ELENA ............................................................................................................... 105

3.7 .1 Brief description of EBRD-ELENA’s features ......................................................................... 105

3.7 .2 Impact/Achievements .......................................................................................................... 106

3.7 .3 Relevance............................................................................................................................ 106

3.7 .4 Effectiveness and Efficiency.................................................................................................. 107

3.7 .5 Sustainability ...................................................................................................................... 107

3.7 .6 Coherence and Sy nergies...................................................................................................... 107

4 Conclusions and recommendations ............................................................................................108

4.1Conclusions on the overall Programme ................................................................................................ 108

4.1 .1 Impacts/Achievements ........................................................................................................ 108

4.1 .2 Relevance............................................................................................................................ 110

4.1 .3 Effectiveness and efficiency ................................................................................................... 111

4.1 .4 Sustainability ...................................................................................................................... 112

4.1 .5 Coherence and synergies ...................................................................................................... 112

4.2Conclusions on each Facility ............................................................................................................... 112

4.2.1 MLEI-PDA .......................................................................................................................... 112

4.2.2 ELENA-EIB......................................................................................................................... 114



4.2.3 ELENA-KfW........................................................................................................................ 115

4.2.4 ELENA-CEB........................................................................................................................ 116

4.2.5 ELENA-EBRD ......................................................................................................................117

4.3Recommendations ..............................................................................................................................117

4.3.1 Building on PDA programme’s lessons ...................................................................................117



List of tables

Table 1 – Sy nthesis of the evaluation questions ........................................................................................... 25 Table 2 –Structure of a project fact sheet (illustrative)................................................................................. 28 Table 3 – Project database contents highlighting interviewed and non-interviewed projects (Interviews

conducted from April 2015 to October 2015) ..............................................................................................30 Table 4 – PDA facilities’ specific features .................................................................................................... 31 Table 5 - Total PDA grants and planned investments (€) ............................................................................. 33 Table 6 - ELENA budget allocation per y ear (€ million) ............................................................................... 34 Table 7 - Number of project awarded per signature y ear. .............................................................................37 Table 8 - Progress status of the 54 interviewed projects. .............................................................................. 41 Table 9 - PDA Facility energy and environmental impacts ...........................................................................50 Table 10 - ERDF resources under the Convergence Objective (not only for EE projects, from 2007 to 2013). .. 63 Table 11- Reclassification of projects with respect to the total amount of investment......................................67 Table 12 - Reclassification of projects with respect to the nature of beneficiaries............................................67 Table 13 - Management Fee calculation for each ELENA facility. .................................................................. 68 Table 14 - Loans committed by KfW. .......................................................................................................... 68 Table 15 EASME - Contributions................................................................................................................ 77 Table 16 EASME - Impacts on Investments.................................................................................................7 8 Table 17 - EASME - Expected Impacts on “20-20-20” objectives ..................................................................7 8 Table 18 EIB – EU Grants ......................................................................................................................... 83 Table 19 EIB - Impacts on Investments ...................................................................................................... 83 Table 20 EIB - Expected Impacts on “20-20-20” objectives ......................................................................... 84 Table 21 KfW - ELENA and global loans allocation to PFIs .......................................................................... 89 Table 22 KfW - Impacts on EU Contribution...............................................................................................90 Table 23 KfW - Impacts on Investments .....................................................................................................90 Table 24 - Global loans delivered. .............................................................................................................. 91 Table 25 Expected Impacts on “20 -20-20” objectives .................................................................................. 91 Table 26 - KfW projects funded activities. ................................................................................................... 94 Table 27 KfW - Analy sis per cluster of investment ....................................................................................... 96 Table 28- Relation between KfW and PFIs. .................................................................................................97 Table 29 CEB - Contributions .................................................................................................................. 103 Table 30 CEB - Investments .................................................................................................................... 103 Table 31 EBRD - Impacts on EU Contribution and Investments ................................................................. 106 Table 32 EBRD - Expected Impacts on “20-20-20” objectives .................................................................... 106 Table 33 – Expected investments triggered by PDA facilities...................................................................... 108 Table 34 - PDA facility energy and environmental impacts......................................................................... 109



List of figures

Figure 1 – Logical approach to evaluation activities ..................................................................................... 14 Figure 2 – Overv iew of the operational approach ........................................................................................ 17 Figure 3 – Survey map .............................................................................................................................. 24 Figure 4 - Number of survey inv itation and surveyed population .................................................................. 25 Figure 5 – Evaluation process: from project to programme evaluation..........................................................27 Figure 6 – EU Contributions shares by facility ............................................................................................ 31 Figure 7 – Expected investment shares by facility........................................................................................ 31 Figure 8 - Signed grants and budget allocation (presented per signing y ear).................................................. 35 Figure 9 - Signed grants and budget allocation per each ELENA facilities (presented per signing year) ........... 36 Figure 10 - Geographical distribution of PDA contributions and Planned Investments................................... 38 Figure 11 – Total Planned investment per signing y ear ................................................................................ 39 Figure 12 – Sectorial breakdown of projects for each country .......................................................................40 Figure 13 - Breakdown of investments in terms of sector..............................................................................40 Figure 14 – Awarded vs disbursed contribution per signing year (54 interviewed projects)............................. 42 Figure 15 – Planned vs current investments per year signing (54 interviewed projects) .................................. 42 Figure 16 - On-line survey questions n. 33 and 36. ...................................................................................... 43 Figure 17 - Achieved leverage factor (On-line survey questions 37, 38 and 39)............................................... 43 Figure 18 - On line survey question n. 81 . ................................................................................................... 46 Figure 19 - On line survey question nn. 81 and 110 ...................................................................................... 46 Figure 20 - On-line survey questions nn. 81 and 53 ..................................................................................... 48 Figure 21 - On line survey question n. 81 .................................................................................................... 49 Figure 22 - on line survey question n. 40 .................................................................................................... 49 Figure 23 - on line survey question n. 42 and 43.......................................................................................... 52 Figure 24 - on line survey question n. 45 and 46.......................................................................................... 52 Figure 25 - on line survey question n. 48 and 49 ......................................................................................... 53 Figure 26 - On-line survey question n. 103.................................................................................................. 54 Figure 27 - On-line survey question n. 81 .................................................................................................... 55 Figure 28 - On-line survey questions n. 15 and 16........................................................................................ 56 Figure 29 - On-line survey question nn. 52, 70, 73 and 111 ........................................................................... 56 Figure 30 - On-line survey question n. 81.................................................................................................... 58 Figure 31 - On-line survey question n. 10 .................................................................................................... 59 Figure 32 - - On-line survey questions n. 12 ................................................................................................60 Figure 33 - On-line survey questions n. 17 and 8 .........................................................................................60 Figure 34 - On-line survey questions n. 12 and 11 ........................................................................................ 61 Figure 35 – Distribution of the activities funded by the ELENA/MLEI facilities for the 54 interviewed projects

................................................................................................................................................................ 62 Figure 36 - On-line survey question n. 52 ................................................................................................... 65 Figure 37 - On-line survey question n. 19 and 20 ......................................................................................... 69 Figure 38 - On-line survey question n. 26, 21 and 22 .................................................................................. 7 0 Figure 39 - On-line survey question n. 27 , 55, 75 and 79 .............................................................................. 7 1 Figure 40 - On-line survey questions n. 52, 70, 73 and 111............................................................................7 2 Figure 41 - On-line survey question n. 12. ...................................................................................................7 3 Figure 42 - On-line survey questions n. 52 and 111 ......................................................................................7 3 Figure 43 - On-line survey questions n. 54 and 78 .......................................................................................7 5 Figure 44 - On-line survey question n. 81 ....................................................................................................7 6 Figure 45 - Structure of the MLEI-PDA. ..................................................................................................... 81 Figure 46- Structure of the ELENA -EIB facility. ..........................................................................................87 Figure 47 - Structure of the ELENA -KfW facility . ........................................................................................ 98 Figure 48 - Structure of the CEB-ELENA facility. ...................................................................................... 105 Figure 49 - Structure of the EBRD-ELENA facility. ................................................................................... 107





Abstract

The EC requested a thorough evaluation of the five PDA facilities that are funded through the IEE II Programme. The PDA facilities include MLEI – PDA (managed by EASME) and ELENA – PDA (managed by the EIB, the KfW, the CEB and the EBRD). The purpose of the evaluation was to understand the outcomes of the IEE II – PDA Programme in order to incentivise investments at a local level regarding energy efficiency , renewable energy and clean urban public transport.

The evaluation was carried out through a deep data collection performed with the collaboration of the Managing Entities (MEs) and project beneficiaries. The evaluation consisted of the organisation of a programme of interviews with the MEs and 54 projects beneficiaries across the EU and the launch of a survey to collect detailed feedback from the project beneficiaries and promotors .

Since 2009, the five PDA facilities have funded a total number of 97 projects, granting a total am ount of approximately 97 million euro to project promoters. The expected investment value is around 5,4 billion euro, taking into account the leverage factor to be achieved.

The analy sis of the PDA programme’s output, results and outcomes has been performed in two different steps:

the evaluation of the programme as a whole, and;

the separate evaluation of the different facilities,

by using the same variables generally adopted to perform this kind of evaluation exercise, namely relevance, coherence, synergies, efficiency and effectiveness. An essential aspect of the evaluation regarded the innovative contents of the funded projects and their potential replicability in different countries/regions.

In particular, a number of positive results have been achieved, stimulating energy efficiency/RES investments and new operational and financial schemes. These results reflect a significant EU added value. The programme in fact, provided relevant responses to the needs of local municipalities to tackle numerous issues hampering the uptake of the energy efficiency market. The MEs proactively worked to cover the lack of

awareness in the field of energy efficiency and renewable energy as well as capacity gaps despite smaller municipalities with isolated projects did not often go beyond business-as-usual with limited innovative contents of projects. However, in most of the cases, the PDA programme contributed to the development of new skills, competences and organisational solutions. The development of these elements will play an exemplary role in the performance of energy efficiency actions in the future, since innovative, financial and operational schemes

developed under the PDA programme could be replicated. Finally , although synergies between the PDA programme and national/regional funds have been very limited, the programme showed a high coherence with the original mandate overall. Therefore, the PDA programme contributed to the development of competences in the energy efficiency/RES at a local level.



1 Introduction

1.1 Background and reference context

In the Energy /Climate framework context 1 , local authorities play a key role in achieving EU Energy and Climate Change objectives, considering that about two thirds of final energy demand is linked to urban consumptions and up to 7 0 % of CO2 em issions are generated in cities2. The European Commission and European Cities and Local authorities have thus shown a clear commitment to energ y and climate local policies by

launching a number of initiatives aimed at supporting cities to implement sustainable energy policy .

Among such initiatives, the Covenant of May ors represents the key local engagement aimed at reducing CO2 emissions by at least 20%, by increasing energy efficiency and developing renewable energy sources. Through Sustainable Energy Action Plans (SEAP) signatory cities outline the activities, measures and time frames showing how they will reach the CO2 reduction target by 2020. Currently 3, the Covenant has approximately 5.750 signatories. The Covenant of May ors strongly interacts with a wide range of projects, policies and initiatives from European institutio ns, public administrations and networks.

In order to achieve the EU objectives, a number of programmes and initiatives have been set up at EU level to support the objectives of the European climate and energy policy.

The leading programme is represented by the Com petitiveness and Innovations Fram ework Program me (CIP)4 aimed at granting funding on innovation activities (including eco-innovation) and aimed at guaranteeing better access to finance and delivering business support serv ices in the regions.

The CIP programme ran from 2007 to 2013 with a total budget of approximately € 3.6 billion, div ided into three specific programmes, as listed in the table below. The Intelligent Energy Europe II (IEE)

program me managed5 by the Executive Agency for Small and Medium-sized Enterprises (EASME, formerly EACI) is one of the three pillars of the CIP programme.

Programme Budget Funding

Entrepreneurship and Innovation Programme (EIP)

€ 2.1 66 Mln

ICT Policy Support Programme (ICT-PSP) € 7 28 Mln

Intelligent Energy-Europe Programme (IEE)

€ 730 Mln

Established under article 37 of the 1639/2006/EC6, the Intelligent Energy Europe (IEE) shall contribute to a secure, sustainable and competitive Europe, aiming at:

fostering energy efficiency and the rational use of energy resources;

promoting new and renewable energy sources and support energy diversification;

promoting energy efficiency and the use of new and renewable energy sources in transport.

1 With the Climate Energy Package “20-20-20” the EU set itself on this path, defining the three challenging objectiv es to be met by 2020: a 20% reduction, at least, in Green House Gases (GHG) emissions, compared to 2005 levels (and a proposal of a reduction of by 40% below the 1990 lev el by 2030); a 20% share of renewable energies on EU energy consumption (and a proposal of at least 27% of the EU's energy consumption by 2030); a 20% reduction of energy consumption, compared to the PRIMES reference scenario “without interv ention”.

2 “ World Energy outlook 2008”, IEA; “Cities of tomorrow - Challenges, visions, ways forward”, European Commission, Directorate General for Regional Policy, October 2011; “Competitive Cities and Climate Change”, OECD Regional Dev elopment Working Papers N° 2, 2 009. 3 http://www.eumayors.eu/, consulted at 6.03.2012. 4 Established by the Decision No 1 639/2006/EC http://eur-lex.europa.eu/LexUriServ /LexUriServ .do?uri=OJ:L:2006:31 0:001 5:0040:en:PDF 5 EASME constributed to most part of IEE’s management. 6 Establishing the CIP Programme.

http://www.eumayors.eu/+-Covenant-of-Mayors-+.html

http://www.eumayors.eu/index_en.html

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:310:0015:0040:en:PDF



The IEE operational objectives (stated in article 38) are:

to provide the elements necessary for the improvement of sustainability , the development of the

potential of cities and regions, as well as for the preparation of the legislative measures needed to attain the related strategic objectives; develop the means and instruments to follow up, m onitor and evaluate the impact of the m easures adopted by the Community and its Member States in the fields addressed by that programme;

to boost investment across MSs in new and best performing technologies in the fields of energy

efficiency (EE), renewable energy sources (RES) and energy diversification, including in transport , by bridging the gap between the successful demonstration of innovative technologies and their effective, broad market uptake in order to attain leverage o f public and private sector investment, promote key strategic technologies, bring down costs, increase market experience and contribute to reducing the financial risks and other perceived risks and barriers that hinder this type of investment;

to rem ove the non-technological barriers to efficient and intelligent patterns of energy production

and consumption, by promoting institutional capacity building at, inter alia, local and regional level, by raising awareness, notably through the educational system, by encouraging exchanges of experience and know-how among the main players concerned, business and citizens in general and by stimulating the spread of best practices and best available technologies, notably by means of their promotion at Community level.

In order to achieve the mentioned objectives, IEE offers three different kinds of support, am ongst which

the Project Developm ent Assistance (PDA) facilities, aim ed at m obilising investm ents in sustainable energy at local level , such facilities being:

1. European Local ENergy Assistance (ELENA), managed by international Financial Institutions, namely :

EIB – ELENA (in force since 2009)

KfW – ELENA (in force since 2011)

CEB – ELENA (in force since 2011)

EBRD – ELENA (in force since 2012)

2. Mobilising Local Energy Investments – Project Development Assistance (MLEI-PDA), managed by the EASME7 (formerly EACI).

All these instruments aim at supporting the preparation and launch of bankable sustainable energy projects or investment programmes. When awarded, the PDA facilities cover a major share of the cost for technical support necessary to prepare, implement and finance the investment projects, (e.g. feasibility and market studies, structuring of programmes, business plans, energy audits, preparation for ten dering procedures, etc .)

The main objective of the PDA is to bridge the gap between sustainable energy plans and real investment

through supporting all activities necessary to prepare and mobilise the needed investments in to sustainable energy projects.

1.2 Evaluation objectives

The m ain objectives of the study are the following:

Assess the im pact/achievements of PDA facilities (e.g. major results, stronger uptake of energy

efficiency and/or renewable energy investments, organisational/financial innovation, c haracteristics of supported investments, achieved results, associated benefits, EU added value);

Evaluate their relevance (e.g. adequacy of PDA objectives, relevance in terms of market needs, problems and challenges),

Assess their effectiveness and efficiency (e.g. appropriateness of the framework, appropriateness of

beneficiaries, adequacy of the level of funding, adequacy of the projects' duration, effectiveness of the dissemination activities);

Evaluate their sustainability (e.g. long term impacts, improved capacity in public authorities, replication of projects, scope of the PDA facilities in the coming y ears);

Assess their coherence and sy nergies (e.g. complementarity, evaluation of overlaps, possible sy nergies with other EU funds).

7 The Agency (EASME) and the IFIs (EIB, KfW, CEB, EBRD) are often mentioned as Managing Entities (MEs)



In this light, since the proposal stage, a comprehensive approach has been presented to fulfil the evaluation needs, as a guide for activ ities design, reported in the Figure below.

Figure 1 – Logical approach to evaluation activities

More in detail, this approach goes through:

Needs and challenges

PDA facilities have been established to address the capacity barriers hampering the development of sustainable energy investment programmes by public authorities.

A need for technical assistance has been perceived by the EC and, consistently, the tools under evaluation have been built to overcome such barriers, either hiring the necessary skills from

the market or developing them internally.

The challenge to be tackled is to build local actors’ capacities and increase their knowledge, competences and skills for designing and managing initiatives in the field of energy efficiency, renewable energies and other low carbon technologies to contribute to the their market uptake.

Objectives

For what above, two groups objectives can be identified for PDA facilities:

◦ operational, e.g. generating a significant number of TA contracts funding project

development activities (technical, economic, juridical) and, consequently, stimulating

investment streams on energy effic iency, renewables, etc. ◦ strategic, e.g. contributing to EU energy policy goals (CO2 reduction, energy efficiency,

renewable energy production increase) together with economic development goals (direct employment creation).

Inputs

In this context, inputs are represented by the financial and organisational resources com mitted in the PDA facilities to achieve the desired objectives. Their use will be analy sed with the EC and Managing Entities’ contribution.

Process

Process analysis will take into account the entire flow of activities leading to the TA contracts signature and, beyond, to investment actual completion monitoring. Among the most relevant activ ity, contributing to the increase of TA potential, communication will be analysed.

Outputs



By outputs, the final products of the process are m eant, nam ely contract signed

(ev idencing the investment taking place). In relation to outputs, a number of indicators can be derived supporting evaluations on efficiency (outputs produced vs resources committed, time to deliver, successful applications vs dropt requests, etc.).

Results

Investments generated and project delivered thanks to PDA facilities shall be considered

among the most important results. Indicators like absolute investment value, investment value on TA grant can be derived and, besides, projects completion state can be highlighted and monitored all along the ev aluation period.

Outcomes

Finally , outcomes are the results related to the implementation of the policy. We will refer to long -

term results of the use of the PDA in terms,

◦ on one hand, CO2 reduction, energy savings and renewable energy production;

◦ on the other, lasting contribution to sustainable development thanks to established

capacities at local level.

This comprehensive approach led to the deep assessment of the five evaluation dimensions as presented in Section 3. In order to answer to all the questions the EC has formulated in the ToR, the five dimensions are assessed using the following evaluation criteria:

Objective 1 – Evaluate impacts/achievements

Impacts/achievements generated by the investments enabled by the TA support will be referred to:

results produced;

outcomes generated

as described just above. Specific emphasis will be given to the achievements of the operational objectives of IEE

expressed in article 38 of the CIP decision, namely :

to provide the elements necessary for the improvement of sustainability, the development of the p otential of cities and regions;

to boost investment across MSs in new and best performing technologies in the fields of EE, RES by bridging the gap between the successful demonstration of innovative technologies and their effective,

broad market uptake in order to attain leverage of public and private sector investment;

to remove the non-technological barriers to efficient and intelligent patterns of energy production and consumption by promoting institutional capacity building at, inter alia, local and regional level, by raising awareness, notably through the educational sy stem.

Objective 2 – Evaluate relevance

Taking into account the policy objectives the PDA facilities have been established to achieve, (among others, those mentioned above), the evaluation exercise will verify their relevance, or to which extent the PDA facilities respond to the needs, problems and challenges arising from the market. In particular, PDA facilities shall address public authorities’ lack of skills for launching sustainable energy investments and to which extent they can be relevant and useful to help businesses develop and implement ene rgy efficiency investments in the private sector? What are the most appropriate sectors to be addressed with these facilities and why .

Objective 3 - Evaluate coherence and sy nergies

Coherence and synergies will be assessed taking into account all the measures formulated and implemented by the EC pursuing the same objectives of the European agenda. Sy nergies and overlaps shall be evaluated in order to place PDA into the picture and check how it can be optimised in the wider picture of EC’s action in the future.

Objective 4 – Evaluate efficiency and effectiveness

The evaluation focussed on the inputs the EC, EASME, EIB, KfW, CEB and EBRD have been providing for managing the programme, the processes in place fed by those inputs and the quality and quantity of outputs,

so that the efficiency of the process can be evaluated. On the other hand, the results of the PDA facilities (e.g.



number of bankable projects, funding provided, financial leverage, amount, etc.) will be evaluated as a basis for evaluating the fac ility effectiveness (see impacts/achievements).

Objective 5 – Evaluate sustainability

Sustainability refers to the ability of PDA facilities of creating the conditions for keeping the projects development process alive, without further interventions from t he EC. More in detail, PDA facilities should have generated lasting impacts on public authorities’ staff capacities to deliver energy efficiency /RES projects. This will be assessed, as well.



2 Methodological and empirical approach

2.1 Overview According to the approach agreed in the inception phase, the evaluation study has been carried out following four m ain phases, as represented in the figure below.

Figure 2 – Overview of the operational approach

2.2 Data collection

2.2.1 Main strategy

Data collection activities aimed at gathering all the qualitative and quantitative data necessary to answer the questions defined by the EC at the evaluation start. For this purpose, four main data collection strategies have been used:

desk research;

face-to-face interviews;

site v isits;

survey.

The data collection phase targeted specific groups, namely, the EC, the Managing Entities, the beneficiaries and market actors. PwC organised interviews and site v isits to contact be all the relevant actors. To each data

collection tool a specific function has been assigned. Their outputs, gathered at the end of the collection stage, helped answering the main evaluation questions put forward by the EC. Particular importance has been attached to the survey, which has been delivered in parallel with the site v isits, to collect information in the v iew of a "customer satisfaction" tool.

2.2.2 Main purposes A careful data gathering activ ity was essential to ensure the quality of the entire evaluation exercise. Data

collection started from available inform ation provided by the EC and the Managing Entities .



Interv iews and site v isits have had different targets, respectively , Managing Entities and Beneficiaries, and different contents (see paragraph 2.2.4 and 2.2.5). All the evaluation questions highlighted in the ToR and

confirmed in the kick-off meeting have been addressed through questions tailored on specific cluster. At the end of this process, the v iews expressed by the diverse stakeholders have been composed in a single picture in order to provide the EC a multidimensional analy sis of the PDA.

Additionally, a survey has been designed and performed, extended to all known project promoters, excluding those who have applied to PDA without success (e.g. project dropt, rejected).

Thus, a specific objective has been assigned to each analy tical tool that, altogether, have enabled a thorough assessment of the PDA facilities.

2.2.3 Desk research Objective of the desk research was to analyse all the relevant information available in EC and Managing Entities documents and other raw data existing. The resulting database worked as a mapping tool of all projects, so far, and will help monitoring the PDA facilities progress all along the evaluation exercise.

The structure of the database was shaped in order to organise available information in the following fields:

General information

Project name

Beneficiary

Ty pe of beneficiary (e.g. local authority, public housing, public transport company etc.)

Contact person

Website

Country

Region

City

Ty pe of project (e.g. energy efficiency, renewable energy resources etc.)

Ty pe of financing scheme/product used (e.g. senior/subordinated debt, secured/unsecured etc.)

PDA facility (ELENA -EIB, ELENA-CEB, ELENA-KfW, ELENA-EBRD, MLEI-PDA)

Contribution

Total PD support cost

% of contribution

Related investment

Leverage (Total investment/EU contribution)

Project expected performances

Expected Energy Savings (MWh/anno)

Expected Renewable Energy Production (MWh/anno)

Expected GHG reduction (t CO2 eq/ y ear)

Expected jobs creation

Project status in the eligibility assessment process, PDA financial commitment

Project status (First discussion, Pre-application, Draft application, Application, Request for

Approval to be sent, Request for Approval sent, Approved, Signed, Finished, Rejected)

Signing Date

Project duration (months)

Budget y ear

PDA financial commitment (and progress in disbursement).

2.2.4 Direct interviews to Managing Entities As stated in paragraph 2.2, the aim of direct interviews to Managing Entities was to get a full comprehension of the context in which they have been operating the process they set up, the results they have obtained so far and the bottlenecks they faced. Coherently with the logical path presented in Figure 1 , interv iews pursued the following objectives:



Needs and challenges: have a clear description of the market failure that the PDA facilities intended to

overcome and the actual role played by the facility.

Processes: design a clear map of the structures and procedures that Managing Entities set up in compliance with the signed Contribution Agreement. The assessment focussed on the Managing Entities job, including communication measures, application assessment and m onitoring of effective results.

Outputs: reconstruct the evolution of the facility in terms of total number of received application, total

number of approved projects, and progress status of pending requests and motivation of rejections.

Results: assess the volume of investment generated by projects developed and the e ffectiveness of PDA facilities.

Outcomes: assess the added value of the implemented actions, in terms of compliance with EU policies,

including:

energy and environmental benefits;

impacts on investments in new technologies;

impacts on local economic development;

impacts on jobs creation;

learning effects and dissemination of good practices.

Interviews have been carried out through face-to-face meeting with the responsible of the Managing Entities ,

supported by a detailed questionnaire steering the conversation through all the issues stated in paragraph 2.2.5.

2.2.5 Site visits Site v isits aimed at gathering in depth information from the beneficiaries of the PDA fac ilities. The overall objective was to investigate the real benefit that the technical assistance brought to the projects as a relevant development factor. On the other hand, it was important to understand what judgment beneficiaries have on the PDA facilities.

Coherently with the logical path presented in Figure 1 , the site v isits have been intended to give an answer to the following issues:

Need and Challenges: understand the reasons that led to the choice of PDA facilities, and the importance of similar alternative financial instruments.

Processes: assess the whole process that the beneficiaries have carried out for obtaining the technical

assistance, highlighting bottlenecks and difficulties.

Outputs: understand if the PDA facilities have been adequate in meeting the projects requirements and if it has been a key factor in the development of the project.

Results: assess the effective volume of investment that has been generated by the investigated project.

Outcomes: assess the added value of the implemented project, in terms of compliance with EU policies, including:

energy and environmental benefits;

impacts on investments in new technologies;

impacts on local economic development;

impacts on jobs creation

Learning effects and dissemination of good practices.

Site v isits have been carried out through face-to-face meeting with the teams responsible for managing PDA in the final beneficiaries’ organisations, supported by a detailed questionnaire designed and organised consistently with the issues pointed out in paragraph 1 .2. The questions are formulated in order gain from the final beneficiaries all the needed information to meet the stated objective of the interviews. 36 sites have been v isited by PwC, colleting a number of direct interv iews with project promoters.

2.2.5.1 Visited sites Project Name Beneficiary PDA Type of Project Country

Elementary school VS Baden Weikersdorf

Baden ELENA KfW

Energy Efficiency Renewable Energy

Resources

Austria

Integrated hydropower plant in Laa an der Thaya

Laa an der Thay a ELENA KfW

Renewable Energy Resources

Austria



Project Name Beneficiary PDA Type of Project Country

Elementary school of Paudorf Paudorf ELENA KfW


Resources

Austria

District heating of Wörgl Wörgl ELENA KfW

District Heating Austria

BEAM Graz Municipality of Graz MLEI Energy Efficiency Austria

VAMOS Société du Logement de la Région Bruxelles

Capitale (SLRB);

ELENA EIB


Resources

Belgium

ESCOLIMBURG2020 Prov ince of Limburg MLEI Energy Efficiency Belgium

ZagEE Municipality of Zagreb, MLEI Energy Efficiency Croatia

EE renovation of the buildings of Aarhus Municipality

Aarhus Municipality ELENA EIB


Resources

Denmark

Aarhus LRT (Aarhus Light Rail Transit project

Aarhus Letbane I/S (Aarhus Light rail I/S)

ELENA EIB

Urban Public Transport

Denmark

Street lightning in Aarhus Aarhus ELENA KfW

Street lighting Denmark

Solrod Solrod municipality MLEI Renewable Energy Resources

Denmark

City of Paris City of Paris ELENA EIB


Resources

France

Vir´Volt-Ma-Maison programme

Région Bretagne ELENA KfW


Resources

France

Franche-Comté Sustainable Building Plan

Région Franche Comte ELENA KfW

Energy Efficiency France

POSIT’IF Société d’Economie Mixte Energies

POSIT’IF

MLEI Energy Efficiency France

DAFNI – Network of Sustainable Aegean Islands

Dev elopment of smart-grid infrastructure in autonomous islands of

the Aegean Sea

ELENA EIB

Renewable Energy Resources

Greece

GeoKec City of Kecskemét MLEI District Heating Hungary

Province of Modena Agenzia per l’Energia e lo Sv iluppo Sostenibile

di Modena (AESS)

ELENA EIB


Resources

Italy

EE Programme for the Province of Chieti

Prov ince of Chieti ELENA EIB


Resources

Italy

Province of Milan Prov ince of Milan ELENA EIB

Energy Efficiency Italy

Marte Marche Region MLEI Energy Efficiency Italy

PARIDE Prov ince of Teramo MLEI Street Lighting Italy

VIPA ESCO VIPA, Esco ELENA EBRD

Energy Efficiency Lithuania



Project Name Beneficiary PDA Type of Project Country

Dutch social housing association

Stichting Havensteder, ELENA CEB

Energy Efficiency Netherlands

The Zero Emission Buses in Netherlands

Zero Emission Bus Transport Foundation

(ZEB)

ELENA EIB

Urban Public Transport

Netherlands

LED PACK Public Lighting Modernisation Project in

South Poland

LED PACK Management Namyslow

Sp. z o.o.

ELENA EIB

Street lighting Poland

Vila Nova de Gaia Vila Nov a de Gaia ELENA EIB


Resources Urban Public

Transport

Portugal

EOL City of Ljubljana ELENA EIB

Energy Efficiency Slov enia

SOMACYL Sociedad Pública de Infraestructuras y Medio Ambiente de

Castilla y León, S.A.

ELENA EIB

Energy Efficiency and Renewable

Energy

Spain

Rediba Diputació de Barcelona ELENA EIB


Resources

Spain

ACCELERATE Prov ince of Huelv a, Energy Agency of

Huelv a (APEH)

MLEI Street Lighting Spain

Swedish housing association AB Alingsåshem, ELENA CEB


Resources

Sweden

Decentralized Energy Greater London Authority (GLA)

ELENA EIB

Energy Efficiency UK

BRITE – Bristol Retrofitting – Innovative Technologies for

Everyone

Bristol City Council ELENA EIB


Resources

UK

OTR Oxford City and Oxfordshire County

council

MLEI Energy Efficiency Renewable Energy

Resources

UK

2.2.6 Second stage of interviews The evaluation activ ity have been refined collecting information, opinions and relevant data from another group of stakeholders and project promoters. Once the site v isits activity gave relevant ev idences used to draft

the interim report, a second stage of interviews was performed to enlarge the field and the quality of evaluation. This second stage was performed submitting a written questionnaire based on the same pillars as in Section 2.2.5, but lighter and refined after the experience gained within the site v isits. A Telco concluded the interv iews stressing the potential open points and agreeing the results of the interv iews.

In this second stage of interv iews we contacted 18 project promoters submitting the lighter questionnaire.

2.2.6.1 Interviewed Projects Project Name Beneficiary PDA Type of

Project Country



Project Name Beneficiary PDA Type of Project

Country

Traismauer - Scherzerhaus Traismauer

Kommunalentwicklungs GmbH

ELENA KfW Energy

Efficiency Austria

Public Lighting in Payerbach Marktgemeinde Pay erbach ELENA KfW Street Lighting Austria

Integrated photovoltaic plants in Tulln

Stadtgemeind Tulln an der Donau

ELENA KfW Renewable Austria

Energy performance of homes in commonhold

properties Pay s Voirronais Municipality ELENA KfW

Energy Efficiency

France

PSEE-ALSACE Regional Council of Alsace MLEI Energy

Efficiency France

Service Publique de l'Efficacité Energétique

Picardie Region ELENAEIB Energy

Efficiency France

PadovaFIT!

Municipality of Padov a, ITS RED Foundation, Innesco,

Banca Popolare Etica, Sogesca

MLEI Energy

Efficiency Italy

Less energy, Less cost, Less impact (Progetto 3L)

Prov ince of Padov a ELENAEIB Mixed Italy

Rotterdam Municipality ELNA CEB Mixed Netherlands

BOWEN Municipality of Hengelo MLEI District Heating Netherlands

ESCOSC Prov ince of North Holland MLEI Mixed Netherlands

Purmerend Distric Heating Company of

Purmerend (SPV) ELENAEIB Mixed Netherlands

Energy4Flexibility Dev elopment Company

Greenport Venlo MLEI Renewable Netherlands

ENSAMB Regional Council of South

Østerdal, Hedmark County MLEI

Energy Efficiency Renewable

Energy Resources

Norway

Eco.AP Lisbon Region ELENAEIB


Energy Resources

Portugal

SPIS Municipality of Malmo ELENAEIB Clean Public

Transport Sweden

L-CIF Cambridgeshire County

Council MLEI


Energy Resources

UK

NEWinRETRO Newcastle City Council MLEI Energy

Efficiency UK



2.2.7 Survey

In order to increase the significance of this evaluation, a survey was proposed in the inception phase, addressing beneficiaries and project promoters. The main purpose of this additional action was to achieve a high level of detail when assessing PDA beneficiaries’ satisfaction . The survey has been a complementary tool to the interv iews to collect specific feedbacks extending the sample, compared to interv iews and site v isits. Quantitative measures, if applicable, allowed to evaluate the activity performed by PDA Managing Entities with respect to its effectiveness, efficiency , added value and impact in order to obtain greater insights into the identified issues.

The structure of the survey followed the evaluation approach as agreed upon by the EC in order to obtain sensitive information on:

Impacts and achievements

Relevance

Effectiveness and efficiency

Sustainability

Coherence and sy nergies



Figure 3 – Survey map

Profile – Skills - Complexities

Direct Beneficiaries and Promoters who lend TA

Beneficiaries who receieved TA from Promoters

Providers / Participating Financial Intermediaries

Approved, Signed/ Awarded and Finalised

In application

Timing Diffculties in the

application/approval process

Financial targets Environmental targets Capacity Building Innovation of the project Dissemination /

Replication

Timing Diffculties in the

application/approval process

Financial targets Environmental targets Capacity Building Innovation of the project Replication

Capacity Building Innovation of the project Dissemination / Replication

Approaching PDA

Identification of type and skills of the surveyed Public authorithy s competencies Project complexity Type of TA

Alternative solutions Motivation to the PDA Comunication behind the PDA Support received during the application Project status

Indirect Beneficiaries

Closing

Entity involved in the project implementation

Capacity Building Innovation of the project Dissemination / Replication

Results of the overall PDA facilities Suggestions

The survey has been developed using a the Qualtrics8 Web platform which met our needs of:

accuracy in obtaining the information;

simple branching (dependencies between questions);

high definition of reporting;

short time of submission and analysis;

high standards in data gathering and processing.

In Figure 3, we report a flow chart showing the survey architecture and the logical links among the different blocks of questions which have been designed for all the categories involved.

The first part is common to every actor involved in PDA funded initiatives and it aims at gathering information on the profile of the survey ed contacts. Then, three main branches can be followed:

1. Applicants (only successful):

a. who directly took benefits from the PDA facilities;

8 http://www.qualtrics.com

http://www.qualtrics.com/



b. who lent support to other public bodies, leveraging on PDA facilities.

2. Beneficiary who received the benefits of the PDA facility from other public bodies.

3. All the other private entity involved in the project implementation.

The first branch is div ided in two alternative paths aimed at evaluate closed or awarded and financed projects, separately from projects which are still in the application phase.

All the surveyed have been contacted to perform the evaluation by the survey . As stated above, this h as been submitted in anony mous way to single participants, not enabled to forward their own link to others .

Figure 4 - Number of survey invitation and surveyed population

Num ber of survey s sent

Num ber of survey s answered

Proportion

Final beneficiaries 67 51 7 6%

T hird parties involved 56 22 39% Financial Institution 8 6 7 5%

T OT AL 128 7 9 62%

2.3 Evaluation

2.3.1 Main evaluation questions Desk researches, direct interv iews, site v isits and the survey have been aimed at providing information to respond to the main evaluation questions put forward by the European Commission.

Im pacts and achievem ents have been stressed as the most important topic to be investigated, with

emphasis on outputs (e.g. TA contract signed), results (e.g. investments mobilised) and outcomes (e.g. CO2 reduction and energy sav ings generated). The final evaluation of such operational measurable dimensions will provide figures and facts on the PDA programme overall impact and feedback on the real added value of the EU action in the field.

This latter is important to justify the EU intervention and to understand how the PDA facilities have responded to the needs, problem s and challenges of the m arket.

An in-depth analysis of the PDA funding process is also needed to respond to the m ain questions

on efficiency and effectiveness of the process management, up to the contract signature. The entire funding “route” has been taken into account to understand how and to what extent the PDA facility has been promoted, whether target groups have been reached and sufficiently informed, how efficiently project s have been assessed, how and to what extent dissemination activities have been carried out to amplify the replication potential.

From the site v isits and the survey, feedbacks about capacity building effects and, thus, lasting im pacts of the PDA facilities have been obtained.

Finally , information have been collected on the complementarity of PDA facilities with other existing schemes at the EU, national or local level. In order to understand if and how a renewed effort for providing PDA can generate synergies with EU cohesion policies or other schemes, a desk analy sis of the main documents available on the DGRegio web-site has been performed.

Table 1 – Synthesis of the evaluation questions

Im pact/Achievem ents

What were the m ajor results in particular as regards the operational objectives of the program m e (Art. 38 of CIP Decision)? What are other outputs of the program m e? Do they m atch expectations? In particular:

Did projects supported by the PDA facilities lead to stronger uptake of energy efficiency

and/or renewable energy investments?

Did supported projects contribute to organisational/financial innovation an d market



uptake of energy saving measures or renewable energy solutions?

What were the m ain characteristics of supported investments in terms of e.g.: Investment volume achieved; NPV/RoI on equity/payback period; Type of financing scheme (Corporate finance/Project finance)/product used (e.g. senior/subordinated debt, secured/unsecured etc.); Type of investor/financier involved; Tenor of provided debt

financing/interest rate/loan default rate; Cash flow evolution and economic/financial perform ance of the investment so far.

What were the achieved results as regards energy saved, renewable energy produced, CO2 em issions reduced and jobs created?

What were the associated benefits of the supported projects? Are these impacts fully

understood by the beneficiaries?

Did the PDA support clearly lead to EU added value and, if y es, in which way?

What has been the im pact of the facilities on EU energy policy development and im plementation?

What has been the im pact on national and regional policies and programmes?

Relevance

Were the overall PDA facilities' objectives adequately specified, notably to ensure

contributions to secure, affordable and sustainable energy for Europe, while enhancing European competitiveness?

T o which extent did the PDA facilities respond to the needs, problems and challenges of the m arket and especially of public authorities to launch sustainable energy investments?

T o which extent can they be relevant and useful to help businesses develop an d

im plement energy efficiency investments in the private sector?

What are the m ost appropriate sectors to be addressed with these facilities and why?

Effectiveness and efficiency

Was the overall framework clear, appropriate and effective?

Did the facilities target and attract the appropriate beneficiaries?

Was the level of funding and other available resources adequate?

How effective were the different PDA facilities? E.g. how effective have the different PDA

facilities been in terms of triggering genuine new energy efficiency investments?

Is the duration of the current MLEI-PDA projects long enough?

Were the activities carried out efficiently and in a cost effective way?

How effective and efficient were the activities of dissem ination?

Sustainability

Is there evidence that the activities co-funded/funded by the programme will have lasting

im pacts?

Was the capacity sufficiently improved in public authorities that were receiving support through PDA facilities to carry out further energy investment projects?

What is the evidence that results from PDA projects are being replicated by other public authorities? How could replication of those results be up-scaled?

What should be the scope of the PDA Facilities in the coming y ears to better reflect the evolution on the market, and the new legal EU fram ework (Energy Efficiency Directive, 2030 Fram ework) and EU financing architecture (MFF 2014-2020), including its Financial Instruments and initiatives relevant to energy efficiency? Are EU-level PDA facilities still needed, taking into account the evolution of the regulatory fram ework and

MFF 2014 – 2020 (in particular ESIF)?

Coherence and sy nergies

Are the PDA facilities complementary to other existing support schemes at EU, national or local level, or do they overlap? What have been the synergies between PDA facilities



and other EU instruments such as those under the EU Cohesion Policy (e.g. ERDF) and other national funding instruments (e.g. national energy efficiency funds)?

Considering the significant increase in the resources m obilised for a low-carbon economy under the new EU Cohesion Policy 2014-2020, what can PDA facilities contribute to ensure that funds allocated for energy efficiency/renewable energy m easures are fully

used?

2.3.2 Evaluation process and instruments The analy tical approach presented in Section 2 enabled a careful exploration of all relevant issues, as described

below in detail.

2.3.2.1 Through desk research Through the desk research, all projects information have been mapped and a database has been compiled to associate outputs, results and outcomes to each intervention , being then able to aggregate such data at:

funding line level (e.g. ELENA-EIB, ELENA-KfW, etc.);

facility level (ELENA, MLEI-PDA);

program me level (the whole PDA initiative).

Figure 5 – Evaluation process: from project to programme evaluation

This database is the basic source of information not only for project mapping but, also, for data processing using common statistical techniques and, finally, for project monitoring purposes. The database now compiled will be kept updated during the entire evaluation period up to the end. The last update will feed the final report with the freshest information available to respond to EC’s questions.

2.3.2.2 Through direct interviews Direct interv iews have been used for fulfilling two main evaluation needs:

understanding the PDA process,

assessing how the funding process has been working from origination to contract signature, but

also

the successful completion of the investments generated by TA opportunities comparing plans with

actual implementation;

understanding the m arket, exploring



PDA “market positioning” among other funding opportunities, geographical differences,

investment scale, etc.;

sy nergies with other EU funds (e.g. ERDF) at project level;

project promoters and (consequently) project quality, capacity building effects;

best practices dissemination campaigns, to foster the cleantech market development.

Being the interv iewees qualified professionals, we tried to get their viewpoint on strategic issues, together with information on the funding operations, complementing the desk research and expanding the heuristic potential of our assessment. Interviews proceedings have been reported separately and the information obtained will fed the evaluation process, responding to the questions EC has proposed.

2.3.2.3 Through case studies When visiting sites and during the direct interviews, we have focussed on project cases. The interest was, among others, on:

how the project idea is born;

how promoters knew about the PDA facility;

how effective and efficient (from their v iewpoint) the funding process has been;

how they built the given initiative and its features (data gathered in desk research will be

modified/integrated);

which capacity building effects this opportunity has had on their Administration;

which impacts in terms of employment creation, contribution to the local sustainability agenda;

lessons learnt;

potential for dissemination of best practices.

A one page factsheet per project has been prepared to present it to the EC, giv ing a brief description of the key variable in a standardized form.

Table 2 –Structure of a project fact sheet (illustrative)



2.3.2.4 Through feedbacks from the survey As proposed during the kick-off meeting, the survey adds to the evaluation a final lay er, measuring, through quantifiable judgements, the project promoters feedback on the PDA facility performances (under the different evaluation dimensions – efficiency , effectiveness, added value, etc.), from direct and indirect experience.



3 Evaluation results

3.1 Presentation of the evaluation results

The evaluation activity focused on the implementation lay ers of the PDA initiative, in order to look at it from many different points of v iew and take a multidimensional picture of the Programme . Using the different tools described in Section 2, all the lay ers have been analy sed to extract any useful information for the evaluation purposes on Impact/Achievements, Relevance, Effectiveness and Efficiency, Sustainability and Coherence and

sy nergies of the PDA programme, with a segmented v iew on the different facilities.

By such tools, the evaluator has been able to draw key information.

1. An aggregated view of the PDA programme, o bserved through the survey, which sounded out a wide audience (Direct and Indirect Beneficiaries, PFIs, local banks, other Third Parties), has been composed, with questions covering all the evaluation dimensions. Besides, the extensive data gathering activ ity carried out helped building a project database enabling quantitative assessment of the Programme at different levels (entire PDA, specific facilities, projects).

2. A specific analysis of facilities (MLEI-PDA and ELENAs) has been performed, thanks to the scan performed by the survey, the interviews with the Managing Entities and the feedback obtained during the site v isits.

3. A detailed analysis at project level was possible thanks to the site v isits and the specific elaboration of factsheets.

In this Section, the evaluation results are presented as above, fulfilling the evaluation approach agreed with the Commission during the Inception phase, aimed at cross-checking facts and figures all along the implementation

chain of the Programme: firstly, going down from the policy -setting level to the field; then, coming back, in a bottom-up approach.

3.2 Aggregated evaluation of the PDA programme

Consistently with the approach described in the prev ious paragraph, in order to perform a high level assessment of the Programme, we mostly rely on the results of the online survey which gave the opportunity to reach a large group of involved parties to share anonymous judgements on the Programme itself. Furthermore,

processing all data gathered from the desk research has helped complementing that v iew with additional statistics.

As a reminder, the project database has been filled-in with inputs coming from:

Interviewed projects, on which more recent information is available thanks to the updated factsheets drafted during the v isits;

Non-Interviewed projects, on which information is available in the data bases and factsheets drafted by the Managing Entities.

In Table 3, a breakdown of the database between interviewed and not-interviewed projects is provided.

Table 3 – Project database contents highlighting interviewed and non-interviewed projects (Interviews conducted from April 2015 to October 2015)

FACILITY N° of projects

Interviewed Not interviewed TOTAL

ELENA 36 39 75

CEB 3 - 3

EBRD 1 - 1

EIB 21 20 41

KfW 1 1 1 9 30

MLEI-PDA 18 4 22

EASME 1 8 4 22



TOTAL 54 43 97

3.2.1 Impact/Achievements Since 2009, the five PDA facilities have funded a total number of 97 projects granting a total am ount of around Euro 97 million to project promoters. The expected investment value is, thus, around Euro 5,4 billion, taking into account the leverage factor to be achieved. In Table 5 and in Table 6 detailed information on

contribution and expected investments are pro vided, broken down by facility .

Figure 6 – EU Contributions shares by facility Figure 7 – Expected investment shares by facility

Source: PwC elaboration on data coming from Managing Entities

As shown by data, the 83% of the total contribution for assistance has been covered by ELENA, with EIB-ELENA having the lion’s share, while the remaining 17 % is covered by the MLEI – PDA managed by EASME. Due to the different minimum leverage factors and to the different type of project targeted between ELENA and MLEI, the respective share of expected investments is slightly different (91 % vs 9 %).

Looking at the different facilities, in particular to take a separate picture of the ELENA’s ones, it should be taken into account that they have:

different starting y ears

different requirements in terms of both minimum investment and minimum leverage factor

different geographic and sectorial scope (e.g. CEB invested in projects with social aims, EBRD invested in

Eastern Europe)

Table 4 – PDA facilities’ specific features

PDA Facility Start year Investment range (million Euro)

Leverage factor

EIB-ELENA 2009 >50 x 209

CEB-ELENA 2011 6-50 x 20

KfW-ELENA 2011 6-50 x 20

EBRD-ELENA 2012 6-50 x 20

MLEI 2011 >6 x 1 5


In the following graphs (Figure 8 and Figure 9), a comparison among the signed contracts and the budget allocated per y ear1 0 to the ELENA facility is shown. Furthermore it is important to mention that MLEI has an

9 For the first two y ears, ELENA – EIB required a lev erage of 25 10 We considered the y ear of the Signing Date and not the y ear of approv al by EC.

MLEI17% CEB

2%

EBRD0%

EIB75%

KfW6%

MLEI9% CEB

2%

EBRD0%

EIB86%

KfW3%



indicative budget as per respective Workprogramme under Horizon 2020 (EASME-managed) and therefore no precise comparison between the contribution from signed contracts and budget allocated to MLEI can be done.

IEE II-PDA programme evaluation shows a significant contribution to the energy efficiency , renewable energy and clean urban transport uptake. PDA initiatives have been able to mobilise more than 5,4 billion euro of planned investment within the context of sustainable energy projects around Europe (4,9 billion euro by ELENA and 480 million euro by the MLEI -PDA facility ).

This result has been achieved by committing a total amount of about 9 7 euro million of grants for supporting project development (ELENA: 81 million euro, average leverage factor 60,61 - MLEI-PDA: 16 million euro – average leverage factor 30,3 1 1).

Nonetheless, ELENA facilities have been so far committing 7 3% of their budget (132 million euro) to final beneficiaries, in detail:

ELENA-EIB has play ed a major role granting around 72,8 million euro. This represents 7 8,35% of its budget (93 million euro), and around 75% of the total awarded by IEE II-PDA (97 million euro). Looking at the project pipeline, ELENA -EIB facility could commit its entire budget (93 million euro) by the end of the 2015.

ELENA-KfW, through its implementation structure, granted about 6,2 million euro to final beneficiaries on

the 15,6 million allocated by KfW to the PFIs, on a total budget of 24 million euro. A boost is, thus, neede d to reach the financial objectives.

ELENA-CEB granted around 2 million on 5 million euro and no other initiatives are foreseen.

ELENA-EBRD committed only about 260.000 on 10 million euro, showing the most significant implementation issues among all the facilities at the time of this evaluation.

Thus, by October 2015, ELENA’s total budget non allocated to final beneficiaries was around 50,7 million euro. Remedial actions shall be taken to avoid budget decommitment.

11 The calculation of the leverage factor is based on the ratio between the planned investment and the EU contribution. In the tables of this evaluation it is homogenised between ELENA and MLEI-PDA. Howev er the calculation of the lev erage factor for MLEI is different from ELENA, since it is based on the project development costs and not on the EU contribution as in ELENA. Thus the lev erage ratio calculated according to the MLEI rules is 22,1 7 where the total PDS cost is € 21 .7 7 9.27 1 .



Table 5 - Total PDA grants and planned investments (€)

PDA Facility Budget

allocation ( A )

Budget Committed to

PFI ( B )

B/A

Budget committed to

final beneficiaries

( C )

C/A Total Planned

Investment Leverage

factor

ELENA € 132.000.000 € 15.648.000 11,85% € 81.246.820 61,55% € 4.924.136.489

60,61

CEB € 5.000.000 - - € 1 .938.000 38,76% € 7 4.175.000

38,27

EBRD € 1 0.000.000 - - € 262.854 2,63% € 5.300.000

20,16

EIB € 93 .000.000 - - € 7 2.865.683 7 8,35% € 4 .663.627.736

64,00

KfW € 24.000.000 € 1 5.648.000 65,20% € 6.180.283 25,75% € 1 81.033.753

29,29

MLEI - - - € 15.936.210

- € 482.848.577 30,30

Total - € 15.648.000 - € 97.183.030

- € 5.406.985.066

55,63

PDA Facility Remaining budget to be

allocated by MEs ( A )

Value of forthcoming PDA grants in the facility project

pipeline ( B )

Total planned investment of

in-pipeline projects (C)

Leverage of in-pipeline

projects (C/B)

ELENA € 50.753.179 23.661.865,50 1.043.435.550,00 44,10

CEB € 3 .062.000 -

-

-

EBRD € 9.737.146 - - -

EIB € 20.134.316 € 23 .661.865,5012 € 1 .043.435.550,00 44,10

KfW € 1 7.819.717 - - -

MLEI - - - -

Total - € 23.661.865,50 € 1.043.435.550,00 -

12 Value of forthcoming PDA grants in the EIB project pipeline is higher than the available budget. Many of the project pipeline are at the very first discussion stage and may not submit any application.



Table 6 - ELENA budget allocation per year (€ million)

Bu dget y ea rs

T ot a l 2009 2010 2011 2012 2013

Bdg. Gra nt t o PFIs

Gra nt t o final

ben. Bdg.

Grant t o

PFIs

Gra nt to final ben.

Bdg. Grant

t o PFIs

Gra nt to final

ben. Bdg.

Gra nt t o PFIs

Gra nt to final

ben. Bdg.

Gra nt t o PFIs

Gra nt to final

ben. Bdg.

Grant t o

PFIs

Gra nt t o

fina l ben.

T otal ELENA

132,00

15,65

81,25

15,00

-

13,42

15,00

-

14,88

30,00

7,85

22,97

37,00

7,80

22,53

35,00

-

7,45

CEB

5 ,00

-

1 ,94

-

-

-

-

-

-

3 ,00

-

-

2 ,00

-

1 ,94

-

-

-

EBRD

1 0,00

-

0 ,26

-

-

-

-

-

-

-

-

-

5 ,00

-

0 ,26

5 ,00

-

-

EIB

9 3,00

-

7 2,87

15 ,00

-

13,42

15 ,00

-

1 4,88

1 9,00

-

17 ,78

2 2,00

-

1 9,34

2 2,00

-

7 ,45

KfW

2 4,00

15 ,65

6 ,18

-

-

-

-

-

-

8 ,00

7 ,85

5 ,19

8 ,00

7 ,80

0 ,99

8 ,00

-

-

Source: PwC elaboration on data coming from Managing Entities (Interviews conducted from April 2015 to October 2015 ).



Figure 8 - Signed grants and budget allocation (presented per signing year).


0,00

10,00

20,00

30,00

40,0020

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ion

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ELENA*2015 - Some projects still in the EIB pipeline

ELENA grants ELENA budget

0,00

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100,00

150,00

2009

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5]

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ion

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ELENA*2015 - Some projects still in the EIB pipeline

ELENA comulated grants

ELENA comulated budget

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MLEI

MLEI comulated grants



Figure 9 - Signed grants and budget allocation per each ELENA facilities (presented per signing year)


0,005,00

10,0015,0020,0025,00

2009

2010

2011

2012

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2014

[201

5]

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ion

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Signing year

EIB

ELENA-EIB grants

ELENA-EIB budget

020406080

100

2009

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2011

2012

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2014

[201

5]

Mill

ion

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Signing year

EIB

ELENA-EIB comulated budget

ELENA-EIB comulated grants

0,00

1,00

2,00

3,00

4,00

2011

2012

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2014

Mill

ion

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Signing year

CEB

ELENA-CEB grant

ELENA-CEB budget

0,00

2,00

4,00

6,00

20

11

20

12

20

13

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14

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ion

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Signing year

CEB

ELENA-CEB comulated budget

ELENA-CEB comulated grants

0,00

2,00

4,00

6,00

2012

2013

2014

Mill

ion

€

Signing year

EBRD

ELENA-EBRD grant

ELENA-EBRD budget

0,00

5,00

10,00

15,002

012

20

13

20

14

Mill

ion

€

Signing year

EBRD

ELENA-EBRD comulated grants

ELENA-EBRD comulated budget

0,00

5,00

10,00

2011

2012

2013

2014

Mill

ion

€

Signing year

KfW

ELENA-KfW grants

ELENA-KfW budget

ELENA KfW allocation to PFI

0,0010,0020,0030,00

20

11

20

12

20

13

20

14

Mill

ion

€

Signing year

KfW

ELENA-KfW comulated grants

ELENA-KfW comulated budget

ELENA KfW com. allocation to PFI



Analy sing the data presented in Figure 8 and Figure 9, is it possible to gain information regarding the absorption rate of the programme. By absorption rate we mean the ratio between the budget committed to the

beneficiary (or the PFI) and the budget allocated to the Managing entities (MEs). Considering how the project have been assigned to the different budget years, as for the ELENA facilities, their capacity to absorb its budget has been around 16 m€/year on average from 2010 to 2015. Results of 2014 are particularly interesting since the amount of signed contributions is nearly twice the previous y ear 2013. In this the contribution of the ELENA-EIB facility have been uppermost. Other ELENA facilities have brought a lower and erratic contribution. Regarding the MLEI facility, it has been stable over 6 m€ million euro in for the first two y ears, and decreased 3 m€ in the 2014. As a whole, the PDA programme, from 2011 to 2014 had an average absorption

rate of around 1 9,4 m€ per y ear.

Table 7 - Number of project awarded per signature year.

2010 2011 2012 2013 2014 2015 T otal

CEB 3 3

EASME 9 7 6 22

EBRD 1 1

EIB 5 9 5 7 10 5 41

KfW 2 15 13 30

BPCE 2 2 4

ERSTE 12 12 24

KommuneKredit 1 1 2

Grand T otal 5 9 14 16 35 18 97

Source: PwC evaluation of data coming from Managing Entities (Interviews conducted from April 2015 to October 2015 updated at 30/05/2015).

Interesting information to be drawn from the data set is related to the geographical distribution of the 97 projects funded by ELENA and MLEI. Among the others, the overall achievements of UK and Denmark are

notable in terms of awarded grant and planned investment. These come from two different set s of reasons as illustrated below.

As shown in Figure 10, it is important to note that these two countries do not have a larger number of awarded projects with respect to other countries but larger projects. The reason for which Denmark and UK succeeded in developing larger projects can be summarised as follow:

In Denmark the political commitment in reaching the so called “20-20-20” goals is very strong. This is

diffused among all the administrative levels, from central government to single municipalities. In this light Denmark is a particular example of widespread competences in the sustainable energy field that allowed local authorities, especially regional authorities, to processing project ideas and in preparing successful applications or project proposals. It has also to be highlighted the important role covered by Danish regional representatives in Brussels in scouting the grant availability . Furthermore there is a easy access to finance.

In UK an important role has been played by the Greater London Authority (GLA), which received the 58% of total grants awarded in the country . In particular the GLA received about 8,8 M€ of contribution from ELENA EIB for three different projects. In this light it has to be valued the importance of public bodies with dedicated energy departments which are capable to set up wide projects able to attract private project sponsors.



Figure 10 - Geographical distribution of PDA cont ributions and Planned Investments


Relevant information is about the Programme uptake both in terms of growth of the granting activ ity and investments triggering, again looking at the 97 projects analysed, with a detail on the y ear of signature of Fund

agreements with Final Beneficiaries.

-

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

18,0

20,0

AT

BE

HR

DK FR

DE

GR

HU IT LT NL

NO PL PT SK SL ES SW UK

mil

lio

n e

uro

Total Contribution

-

200,0

400,0

600,0

800,0

1.000,0

1.200,0

AT

BE

HR

DK FR DE

GR

HU IT LT NL

NO PL PT SK SL ES SW UK

mil

lio

n e

uro

Total Planned Investment



Figure 11 – Total Planned investment per signing year

€ 0,00

€ 100,00

€ 200,00

€ 300,00

€ 400,00

€ 500,00

€ 600,00

20

12

20

13

20

14

Mill

ion

€

Signing year

MLEI

MLEI planned investment MLEI com. planned investment

€ 0,00

€ 1.000,00

€ 2.000,00

€ 3.000,00

€ 4.000,00

€ 5.000,00

€ 6.000,00

20

09

20

10

20

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[20

15]

Mill

ion

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Signing year

ELENA

ELENA planned investment ELENA com. planned investment

€ 0,00€ 500,00

€ 1.000,00€ 1.500,00€ 2.000,00€ 2.500,00€ 3.000,00€ 3.500,00€ 4.000,00€ 4.500,00€ 5.000,00

2009

2010

2011

2012

2013

2014

[201

5]

Mill

ion

€

Signing year

EIB

ELENA - EIB planned investment

ELENA - EIB com. planned investment

€ 0,00

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2011

2012

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ion

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CEB

ELENA - CEB planned investment

ELENA - CEB com. planned investment

€ 0,00

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12

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EBRD

ELENA - EBRD planned investment

ELENA - EBRD com. planned investment

€ 0,00

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€ 160,00

20

11

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Signing year

KfW

ELENA - KfW planned investment

ELENA - KfW com. planned investment



Additionally , a sectorial v iew is worth to give. Investments are div ided in 5 main areas:

Energy Efficiency

Renewable Energy

Clean Public Transport

Street Lightning

District Heating

with 43 projects out of 97 making investments in more than one sector. Most of them combined energy efficiency interventions with renewable energy plants installations.

Figure 12 – Sectorial breakdown of projects for each country


Figure 13 - Breakdown of investments in terms of sector.


3.2.1.1 Ongoing results When it comes to ongoing results, two information sources support the analy sis. From one hand, we have figures coming from the factsheets drafted after the site v isits and interviews (54); from the other, beneficiaries participating to the survey have been asked to provide the same data (38).

In Table 8, the progress status of the 54 interviewed projects is reported, looking at the disbursed

contribution vs awarded and at the current investments vs planned.

0

5

10

15

20

25

AT BE HR DK FR DE GR HU IT LT NL NO PL PT SK SL ES SW UK

Nu

mb

er

of

Pro

ject

s

Number of projects per sector of investment

Clean Public Transport District Heating Energy Efficiency Renewable Street Lightning Mixed

Clean Public

T ransport22%

District Heating

1%

Energy Efficiency

22%

Mixed51%

Renewable2%

Street Lightning

2%

€ 0

€ 500

€ 1.000

€ 1.500

€ 2.000

€ 2.500

€ 3.000

Planned Investment per Sector



Table 8 - Progress status of the 54 interviewed projects.

PDA Facility

N. of interviewed proje

cts

Budget committed to final

beneficiaries EUR ( A )

Disbursed Contribution

EUR ( B )

B/A

Total Planned Investment

EUR ( C )

Leverage

factor

Current investment generated

EUR ( D )

D/C

ELENA 36 42.254.485 20.826.37 4 49,29% 3.042.212.898 7 2,00 1.138.07 4.980 37 ,41%

CEB 3 1 .938.000 82.000 4,23% 7 4.175.000 38,27 500.000 0,67%

EBRD 1 262.854 - 0,00% 5.300.000 20,16 - 0,00%

EIB 21 37 .251.664 20.246.374 54,35% 2.862.447.898 7 6,84 1 .123.092.980 39,24%

KfW 11 2.801.967 498.000 17 ,77% 100.290.000 35,79 14.482.000 14,44%

BPCE 3 1 .121.517 147 .000 13,11% 65.206.000 58,14 7 .899.000 12,11%

ERSTE 7 690.450 221.000 32,01% 14.784.000 21 ,41 4.883.000 33,03%

Kom.Kred. 1 990.000 130.000 13,13% 20.300.000 20,51 1 .700.000 8,37 %

MLEI 18 14.403.034 6.47 4.800 44,95% 435.090.905 22,17 98.609.152 22,66%

Total 54 56.657.519 27 .301.17 4 48,19% 3.47 7 .303.803 - 1.236.684.132 35,56%

Source: PwC elaboration on data coming from Interviews conductedfrom April 2015 to October 2015 and Managing Entities datasets



From this v iewpoint, which is only partial as based on 54 projects, it can be derived that most of the ELENA and MLEI projects are still in the project development phase. Therefore, the investments actually made are n ot y et

reaching the expected investments agreed in the grant agreements. Nevertheless, the investments already achieved provide at this stage a leverage which is above the minimum requirement of the ELENA and MLEI facility : 23 for the ELENA facilities and 18 for the MLEI -PDA facility .

In the figures below, the same data are provided by y ear.

Figure 14 – Awarded vs disbursed contribution per signing year (54 interviewed projects)

Figure 15 – Planned vs current investments per year signing (54 interviewed projects)


The evaluator has asked the beneficiaries the same information, in terms of (Figure 16):

Awarded vs disbursed contribution;

Planned vs current investments.

The results show that most of the projects have not y et achieved the planned investments considering their early implementation stage. The survey sounded out the beneficiaries on the reason why they achieved a lower leverage factor than planned, at least so far (thr ee main reasons obtained reclassify ing open text answers, Figure 17 ).

In this, it is ev ident that almost 50% of survey ed awarded beneficiaries attributed the low resul t to the early implementation stage. The same result arose from the site v isits activ ity . In addition, some beneficiaries

explained that complex tendering procedures, or changes in national policy are representing additional challenges for achiev ing the ex pected investments in time.

-

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

2010 2011 2012 2013 2014

M€

Contribution Disbursed

-

200,0

400,0

600,0

800,0

1.000,0

1.200,0

2010 2011 2012 2013 2014

M€

Planned Investment Current investment



Figure 16 - On-line survey questions n. 33 and 36.

Figure 17 - Achieved leverage factor (On-line survey questions 37, 38 and 39)

Source: PwC elaboration on data coming from the online survey

From the face-to-face interviews with beneficiaries the most common issues affecting project development and implementation are, among others:



problems in the tendering procedure due to immaturity of the local market;

difficulties in involving indirect beneficiaries (e.g. municipalities) due to budget constraints and changes in political commitment;

long negotiation with building-owners;

overestimation in the application phase of investment due to the scarcity of data.

Problems for obtaining bank guarantees

From the interv iews conducted it clearly emerged that market dynamics and changes in policies can affect the implementation of PDA projects. Indeed, numerous are the variables that concur to the definition of a project proposal and they may be unclear before the project implementation or may be subjected to changes in time.

Examples from the interv iews are listed hereunder:

Province of Milan (ELENA EIB – signed in 2010)

The project set up a wide EPC programme with the ambitious target of 90 M€ of investments (leverage factor of 46). Despite the success of the first tender procedure (13,5 M€ of signed investments), the successive two bids went void. A fourth one succeeded in signing further 4,3 M€ of investments, but the related municipality have not signed the operational contract with the awarded ESCo y et. Taking into account the deep work carried out by the project implementation unit, the beneficiary claims that the unsuccessful result of the projects must be

ascribed to the low maturity of the local market and to the unpreparedness of municipal authorities in implement EPC schemes. Finally the project achieved a leverage of 8 so far (11 if the fourth tender is taken into account).

Province of Chieti (ELENA EIB – signed in 2011)

The project set up an EPC programme with a target of 80 M€ of investment (leverage factor of 44). So far the

project led to the implementation of EPC contracts for a total a mount of 9,7 M€ of investments achiev ing a

leverage of 7 ,5. Other two tenders have not received any formal offers. Any way , the project responsible are

confident to reach the minimum leverage (25) factor within the tender they are currently launching which is

expected to trigger 30-35 M€ of investments. The level of investment decreased due to the repeal of national

subsidies on PV power plant and due to the lack of political commitment within the participating municipalities

which faced a competition with the CONSIP schemes.

PARIDE - Province of T eram o (MLEI – signed in 2012)

The project aim to set out EPC contract for a wide renovation p rogramme within the most part of the province municipalities. The total expected investment was 16,8 M€. Despite initial difficulties and the defection of some

of the participating municipalities, a tender procedure is currently being launched which is expected to trigger at least 16,5 M€ of investments. This will ensure the achievement of the minimum l everage (15).

ACCELERAT E – Province of Huelva (MLEI – signed in 2012)

The first scheme of the investment programme developed in the application proposal by t he beneficiary was the following: 5M€ investments for lighting efficiency; 2.5 million for energy efficiency in buildings, and a up -to-date undetermined investment on renewable energies .

During the project implementation, the investment in renewable energy resources have been discarded after the change in Spanish renewable regulation. The same happened for the energy efficiency projects for buildings in favour of the investments focusing on lighting efficiency , as the sav ings were more easily to quantify an d had more sense for the bundling investment. At this stage, the beneficiary is finalizing the tender procedures with the goal to reach the planned investment in the field of lightning efficiency and thus reach the planned leverage factor.

LED-PACK

The project LED PACK in Poland encountered troubles with bank guarantees. Bank guarantees should be obtained by the Special Purpose Entity owed by the municipality as it is formal leader of the Projects. However both the SPV and the municipality of Namy słów have not been able to obtain a guarantee covering value of whole Projects which was supposed to include engagement of 33 municipalities. This kind of issue may strongly affect the disbursement of grant from the ELENA Facility .

OT R – Oxford City Council (MLEI – signed in 2012)



The scale of potential public estate pipeline projects was reduced compared with the original expectation (32,2

M€ with a leverage factor of 17 ). This was due to changing asset management in the current national policy

context of reduced funding for local authorities and to defection of landowners. At the time of the evaluation,

the project promoter has triggered 17 investments for a total amount of 3,2 M€. The current pipeline of project

that the beneficiary is confident to deliver within the end of the projects counts of 74 projects with a forecasted

total investment of 27 M€. If these forecasts will be respected, the project finally will reach the minimum

leverage factor of 15.

From the second stage of interv iews similar conclusions can be considered. Obstacles hindering the

implementation of investments are related to several factors, but often PDA successfully intervenes de-risking

the investments and making the projects feasible. Some of these risks are related to:

The compatibility between local objectives, how they are pursued and the reactions of the stakeholders

involved, or;

The accuracy of the assumptions considered during the analy sis of market and economic evaluation.

Among the projects interv iewed in the second stage two of them can be mentioned:

L-CIF - Cam bridgeshire County Council (MLEI –signed in 2012)

The case of the project L-CIF is exemplary . The regional authority faced the most important energy issues by means of careful study and observation of the loca l context where to operate. Several challenges have been identified:

Energy needs. The County set up the objective of achiev ing the 28% of energy consumption from sustainable and clean sources by 2030.

Density of population. Most of the region is country side and population is widespread with no large agglomerate of inhabitants. This would imply good basis for renewable installations (considering large scale option).

High number of small scale installation. The area counts a good presence of distributed energy by PV panels and other small scale application. On the other hand the Region underlined the high transactional and financial costs paid so far by the whole renewable power installed (the sum of all the small installation, rather than large scale programme).

Given this ev idences, the County considered that the cheapest and also most profitable intervention to

address, was large scale wind power plant, but NIMBY effects undermined this option making th is intervention non feasible.

BOWEN – T he m unicipality of Hengelo (MLEI – signed in 2012)

The project Bowen aims a developing a district heating network and minimising the waste of heat form nearby biomass plant. However the project encountered several difficulties in the competition with fossil fuel alternatives. The effect of the stagnating gas prices lead to a weakened competitive position of SPV in charge of developing the district heating network (DHN) compared to fossil fuel alternatives.

All the parties involved have also been survey ed with qualitative questions regarding to what extent the five PDA facilities led to a stronger uptake of investments in sustainable energy . It clearly emerges that in both the beneficiaries’ and the third parties’ o pinion, the PDA facilities have contributed to increase the amount of resources invested in sustainable energy -related initiatives. Although still presenting a good average, beneficiaries are more cautious in stating that the triggered projects went bey ond business -as-usual ones, notwithstanding the good level of respondents who expressed a vote between 7 and 10.



Figure 18 - On line survey question n. 81.

Th e Score in th e x -a x is r epr esen ts th e per son a l ev a lu a t ion ex pr essed by th e su r v ey ’s pa r t icipa n ts.


On the same topic, the survey has been useful to gain the v iewpoint of local market actors involved i n the projects implementation whose answers are highlighted in the last chart of Figure 18. Local actors’ answers, even though with a clear deviation, show that the PDA facilities, in most cases, brought a significant increase of

opportunities in the sustainable energy market.

Figure 19 - On line survey question nn. 81 and 110





This emerged, as well, from the site v isits in which, although many beneficiaries highlighted tha t the market is far from being fully prepared to aggregate diffused energy efficiency investments, clearly arose that the new

financial and operational schemes developed under the PDA are helping operators to overcome market immaturity. This is particularly true within contexts affected by either funds scarcity or strict budget regulation, in which the lack of competences inside public authorities would have hampered the implementation of new operational/financial models able to attract private investments.

Innovation content

Both through the survey and the face-to-face interviews with beneficiaries, we investigated how much the PDA brought in terms of innovation in operational and financial schemes. Also in this case, the analy sis has been carried out from a double point of v iew: from one hand, the survey delivered qualitative judgement about how and to what extent beneficiaries and involved parties perceive innovation (namely , what is innovative, why ); from the other, the site v isit activities enabled the effective assessment of the innovation degree of each project.

The evaluation have been performed considering a general definition of innovation, including three main

categories of innovation, as described below:

Operational innovation

In many cases the implementation of the project funded by the PDA implied operation innovation, in the form of e.g. :

the definition of large scale programs, through bundled initiatives;

the creation of new dedicated public agencies;

the establishment of strong cooperation and sy nergies among different involved parties;

the creation of firm cooperation within public bodies and private financial institutes.

Financial innovation

Some initiatives rely on financial models going bey ond business as usual schemes, like:

Energy Performance Contracting models with ESCOs;

Dedicated revolving/guarantee funds, even exploiting synergies with structural funds.

On-tax pay ments

In some others, financial schemes are simpler, ending up e.g. in loans.

T echnological innovation

The implementation of innovative technologies is not within the objectives of the PDA programme. More than that, already marketed and mature technologies enable larger and less risky investment and this is the domain

”The market is far from being fully prepared to deal with wide diffused energy efficiency investment without public

subsidies. Anyway we are sure that our project gave a consistent contribution for the market uptake of new financial

and operational schemes.”

Interview with AESS – Province of Modena

“As a bank our business is to prov ide financial instruments to customers. With ELENA we found an effectiv e

instrum ent to foster and open new m arket opportunity .

We think that ELENA allow to create the env ironment to accelerate inv estment, but at the local lev el did not

transform ed y et the m arket. Results are good but not enough, we need m ore tim e.”

Interview with BPCE

“Italy is running a long-lasting recession’s period. Without the contribution of this project probably sustainable

energy market, employ ment and dev elopment of new skills would not increase their lev el at all.”

Interview with the Province of Padua- 3L project



in which all the projects lay down. However, more than 40% of the ELENA beneficiaries surveyed classify their projects as being technology innovative.

Interesting to see, Figure 20 shows a different perception of the innovative contents brought by their projects comparing ELENA and MLEI’s beneficiaries. While MLEI’s ones concentrate their responses on the highest scores, ELENA’s funded beneficiaries do not share the same v iew. A simultaneous analy sis of the responses given to the other questions on the subject shows that the majority of the respondents from the MLEI’s field thinks that they have worked on innovative models (mainly operational/contractual) even activating public -private cooperation opportunities. Looking into the financial schemes applied, it can be said that MLEI has been more focused on the deploy ment of innovative solutions like Energy Performance Contr acting.

Such statement is worth an additional assessment of the financial schemes arising from the site v isits and the other information available.

Figure 20 - On-line survey questions nn. 81 and 53

Th e Score in th e x -a x is (lh s g r a ph ) r epr esen ts th e per son a l ev a lu a t ion ex pr essed by th e su r v ey ’s pa r t icipa n ts.


As far as regards the use of innovative financial schemes, in fact, the respondents answers reported in Figure 21 and Figure 22 show interesting judgements.

The first chart is consistent with the results given in Figure 20 showing a clear difference among the ELENA and MLEI programmes. In particular, the MLEI’s beneficiaries are more convinced about the innovative

content of their projects, while this is not so ev ident from ELENA beneficiaries’ response.

Using interv iews and site v isits, the innovation topic has been analysed in depth and many interesting elements have arisen. For example, it has been said that the convenience to set up more complex schemes (e.g. project finance through EPC) largely depends on the dimension of the funded project. Tenders preparation and procedure, in fact, are much more difficult than traditional direct financing and its development is not suitable and economic for small projects. Besides, the market is not enough mature and, therefore, it is not easy to find reliable market operator at the very local scale.



Figure 21 - On line survey question n. 81



Figure 22 - on line survey question n. 40


On the other hand, there can be innovative content also in more traditional approaches. In some cases, for example, the need for establishing clear financing c onditions for the project, although funded through loans, required a close cooperation between local and regional authorities and financial institution since the very beginning of the project phase. Such cooperation had capacity -building effects to the benefit of the public

authorities and, additionally , contributed to mitigate the information asy mmetries limiting financial actors intervention in energy efficiency projects, especially in the public domain.



Evaluation on Innovation represented an essential part of the second stage of interviews and the new ev idences confirmed the innovative aspects of most MLEI and EIB projects. In general, i t can be said that the PDA’s

objective to stimulate innovative scheme s has been achieved. The inclusion of the PDA programme within H2020 confirms that innovation is at the core attention of the Commission. In this context, since many experiences have been produced in the o ld programme, H2020 should foster not only new solutions but also dissemination of the successful ones developed so far, in order to avoid “reinventing the wheel” cases.

Environm ental im pacts

The expected environmental impacts are summarized in the Table 9 for the 97 projects. This represents the most updated end completed picture on the funded projects obtained by the desk research activ ity , the site

v isits and interv iews.

Table 9 - PDA Facility energy and environmental impacts

Energy Savings [MWh/y]

Renewable Energy production [MWh/y]

GHG Emission Reduction [t CO2/y]

ELENA 3.009.445 627 .699 956.651

MLEI 1 .134.07 2 7 16.959 502.7 34

Total 4.143.517 1.344.657 1.459.385

Source: PwC elaboration on data coming from the Managing Entities , DG ECFIN, DG ENER, Interviews conducted from April 2015 to October 2015

As well as in the case of financial impacts, beneficiaries have been survey ed with questions related to the environmental outcomes of their projects, with focus on:

achieved results vs planned results;

expected results vs planned results.

The image coming out from collected answers is depicted in the charts shown in the following pie charts (Figure 23, Figure 24 and Figure 25). As obvious, such data are in line with those showing the progress status of investment already shown in Figure 15 and percentage of achievements are similar across different facilities . During the site v isits activities, the difficulty of reaching the expected results was explained by various reasons,

for example:

overestimation of the expected energy savings, due to the scarcity of data, in early project stages;

overestimation of the demand for energy efficiency of private actors, when they are involved in public -led initiatives;

introduction of budget constraints that hampered the expenditure capacity of public bodies;

difficulties when engaging indirect beneficiaries, as changes in political commitment in municipalities resulting in a smaller number of intervention to be included in the final investmen ts;

changes in national policies (e.g. incentives to renewable energy production).

“The approach of Energies POSIT’IF is innovative compared to the traditional approach for financing low-energy

refurbishment projects which relies on subsidies. The economic model that has implemented the semi-public

com pany brings significant long-lasting contribution in fostering energy efficiency as it relies on third party

financing, a sustainable financial mechanism which, in contrast to subsidies, is not subject to budgetary constraints

of public institutions”

Interview with Energies POSIT’IF

“We did not invent any new financial scheme, but the real innov ation is to bind together the technical and the

financial capacity with a real simple scheme. Our idea is that investments have to be sim ple and transparent and in

this light loans are the best solution because of its sim plicity and wide diffusion.”

Interview with BPCE



On the last point, it can be stressed that, in the last few y ears, many Governments (e.g. Spain, Italy ) have reduced their support to RES development, thus, investment programmes containing large PV implementation

have been scaled down.



Figure 23 - on line survey question n. 42 and 43







Source: PwC elaboration on data coming from the online survey.

91%

0%0%9%

What is the level of renewable energy production achieved so

far vs planned results?(ELENA BENEFICIARIES 11)

0-25%

26-50%

51-75%

76-100%



Additional associated benefits

This point has been touched both in the on-line survey and in the interv iews taken with managing entities and

final beneficiaries.

As a first results, while the effects referring to the so called “20 -20-20 goals” are fully understood and quantified by project promotes, the same cannot be said for the generated additional benefits. As a n ev idence of this, it has to be noted that only 21 surveyed contacts gave an explicit answer to the part of survey focusing on associated benefits. The provided description was reclassified and summarised in the histogram shown in Figure 26.

Binding the results coming from the survey with these coming from the site v isit activ ity , the most common

impacts perceived by beneficiaries are:

increased life quality thanks to renovated buildings or facilities;

creation of competences, not only within the public authority promoting the project, but also among all the parties involved in the preparation and implementation phase;

creation of management skills within the authority that led t he project;

support given to the local economy both during the preparation phase, which in most cases required specialised consultants from the market, and during the implementation phase;

increased awareness within the local authorities and also within th e citizen touched by the results;

generation of money savings to be used for other investments.

Regarding the job creation impacts, the survey results suggest that this additional benefit is not fully perceived by the beneficiaries. Indeed, on a total number of 38 survey ed beneficiaries, only 15 beneficiaries answered about the impacts in terms of job creation (questions nn. 50 and 51). The same can be said when speaking with

respect to the application and report documents in which the impacts of the project in terms of new employ ees are not alway s well explained. This is particularly true for the impacts foreseen for the implementation phase.

As a conclusion, it can be said that associated benefits are understood by project promoters only in a qualitative way , and that in most cases neither reliable quantifications nor real measured outcomes are available from beneficiaries.

Figure 26 - On-line survey question n. 103

EU added value

Considering the relevant weight of the EU added value dimension in the evaluation, a special attention has been paid to analy se it in any step of the data collection phase, especially through the survey and the interviews, both to Managing Entities and Beneficiaries. In this light, the leading question dealt with the existence of similar facilities at national and local level and the gaps covered by the PDA programme.





As shown in Figure 27 , the feedback from Beneficiaries and Third Parties responding to the survey has been positive, with the most of the feedbacks concentrated in the upper side o f the scores range.

A more detailed feedback has been received during the face -to-face interv iews. From the discussion with the Managing Entities, the following statements arose.

The EU added value is not the same in all Member Countries. There are cases (e.g. Germany, where many facilities (e..g. KfW programmes) already exist and this explains the absence of German projects in the

PDA’s basket) where the offer is abundant and there is no need for EU action (mostly shared v iewpoint).

Both from KfW and EBRD, it arose that, in Eastern Europe, the PDA programme is currently facing the competition with the MFF-EE1 3 which requires a very low leverage factor (1 :5, compared to 1 :15/20 of MLEI and ELENA). Moreover, EBRD is active with other facilities supporting energy efficiency projects using its own technical assistance schemes, which go beyond the project design phase.

In other countries, there is a huge need of support, with many projects looking for funding. Therefore, the PDA facilities didn’t create competition issues (EIB’s statement). Either when national and/or facilities are there (but ev idences of similar tools are very scarce) or when local authorities can support project development with own funds (e.g. in Denmark, source KommuneKredit) PDA facilities have play ed the role of enhancers.

Convinced statements have been made, for example by EASME, about the fact that, without the PDA, the

most part of the projects would have not taken place at all or, at least, in that manner. A few of them would have materialized, but PDA added a strategic structure (a knowledge boost) to many of these initiatives. An indirect evidence of the lack of similar tools at regional/local level is that all the applicants looked for funding at European level, where the competition is higher, more than “knocking at the next door”, therefore it can be said that the same opportunities were not there.

Extensive has also been the seeking of EU added value during the site v isit activ ity . What emerged from interv iews with beneficiaries is that they all are not aware of similar initiative at all levels. Two similar questions have been moved through the survey and the results are in line with the site v isit findings as shown in

Figure 28, below.

13 The Municipal Finance Facility is an initiative of the European Commission and the European Bank for Reconstruction and Dev elopment (EBRD) to develop and stimulate commercial bank lending to small and medium -sized municipalities and their utility companies in the EU countries who joined the EU in 2004 (Czech Republic, Estonia, Hu ngary , Latv ia, Lithuania, Poland, Slovak Republic and Slovenia with Bulgaria and Romania). The facility combines EBRD finance in the form of long-term loans and/or risk sharing.



Figure 28 - On-line survey questions n. 15 and 16


All the existing facilities focus on the implementation phase and no other facilities are able to provide Project Development Assistance support at the pre-implementation stage. Other sound advantages of the PDA facilities are:

the high funding ratio (up to 7 5% for MLEI and 90% for ELENA);

the flexibility to be adapted to different type of investments;

the result-oriented nature, providing incentives to really delivering projects (otherwise, funds must be returned).

A second question stressed both in the site v isits activity and in the on-line survey was about the essential role

play ed by the PDA facility for the development of the project. The greater part of the beneficiaries confirmed that the PDA has been a key factor for delivering their initiatives and that, without it, the project would have not been there or, at least, it would have been smaller , more lengthy or less complex. The same question was given to the different parties involved in the projects through the on-line survey (Figure 29).

Figure 29 - On-line survey question nn. 52, 70, 73 and 111





With respect to the different survey ed parties, the following points can be highlighted:

MLEI’s beneficiaries showed a stronger judgement about the facility added value (confirming EASME’s viewpoint);

overall, the judgment provided by Third parties involved in the projects funded is positive;

as well, also indirect beneficiaries expressed a favourable vote, but their number is quite low to be

significant.

The different judgement arose in the survey between the ELENA and the MLEI beneficiaries need to be analy sed more in depth. To such purpose , the results of the face-to-face interv iews carried out with project promoters give the chance to analyse the perception of the beneficiaries of each single facility separately . If, on one hand, this activ ity highlighted the same very positive judgement for the MLEI projects, on the other hand a dispersed judgement arose among ELENA beneficiaries:

EIB: according to the interviewed beneficiaries, apart few exceptions like the project City of Paris, their project would have not been carried out without PDA, or at least on a lower extent.

KfW: the opinion that the projects would have been carried out anyway , but with a lower extent, is very common among the interv iewees, especially within the Austrian projects.

CEB and EBRD: all the four interv iewed projects stated that the PDA have not been a key factor for the main success of the investments.

From the second stage interv iews one case needs to be mentioned from ELENA KfW: the project performed under BPCE in the municipality of Pay s Voirronais. This project in fact offer an interesting point of v iew in term of new relationships created between financial operators, like the local banks and the municipalities. In this case according to the beneficiary from the municipality of Pay s Voirronais and also the Banque Populaire de

Alpes which accepted to be interv iewed, ELENA (and the combination with KfW Loan) incentiv ised several positive outcomes:

1. The brand new interest of a local bank to energy efficiency investment. The bank in fact never faced this kind of projects before, and ELENA contributed in enhancing the scope of energy efficiency investments;

2. The municipality discovered a great advantage in creating a strict collaboration with the bank for this kind of intervention.

This leaves the floor to potential further investments based on the new competencies enhanced in both the local authority and the local bank.

The results coming from Figure 29 have to be compared with those highlighted in Figure 20 concerning the innovative contents of the funded projects. The role of PDA grants is indeed key to support the innovative structure of financial and organisational schemes. In this light it has already been clearly underlined that MLEI initiatives have more focus on innovativeness and this has been confirmed both from the interv iews with Managing Entities and from the site v isit activ ity .

Impact on national and regional policies

As shown in Figure 30, surveyed actors provided responses showing some dispersion. MLEI’s beneficiaries

seems to have a clearer perception of the role played by their projects in contributing to national and regional

policies, with an higher average and lower deviation compared to ELENA’s ones.



Figure 30 - On-line survey question n. 81.



Although this has been a focus point of interviews with Managing Entities, Beneficiaries and Third Parties there are no clear ev idences that the initiative funded under the PDA programme have had diffuse impacts at national level. Only during the face-to-face interv iew with the Posit’IF project responsible a clear case of impact on national policy have been highlighted. Any way , there are clearer indications on the role play ed by the

programme’s facilities to support local sustainable policies, which was at the core of the PDA’s objectives.

It is probably too early to conclude on more wider impacts than local/regional. It will also be crucial to see if and how the lessons learnt in the PDA programme are passing to the ESIF programming period. The evaluator’s perception, while interviewing beneficiaries is that this link is not direct although there are ev idences that many projects have been acting as showcases which should be taken by National and Regional Managing Authorities when planning their actions.

In the meantime, there are clear confirmations that local sustainable policies have been supported, although the

number of projects funded, when compared to the number of signatories of the Covenant of May ors (CoM), is negligible.

3.2.2 Relevance Adequate specification of the PDA facilities objectives

It can be said that the PDA facilities have been built around a clear set of objectives, namely to respond to the needs of local authorities which committed themselves in contributing to the achievement of the EU energy and

”The Posit'’IF project intended to include third parties financing in its scheme. This is an innov ativ e financial

m echanism which aims at lending to an owner of a condominium a part of the costs required for the refurbishment

based on an EPC investment. Once the project is com pleted the owner pay back Energie POSIT'IF ov er a defined

period of time with the cash flow generated by the sav ings.

Howev er in April 201 4 the French Autorité de Control Prudentiel et de Résolucion-ACPR mentioned that this

m echanism was not legally permitted. As a response the beneficiary called on at the National Governm ent in order

to include a specific clause in the national "Energy Transition Law” allowing semi-public companies to engage third

party financing activ ities.”

Interview with “Energie Posit’IF”



climate objectives related to CO2 reduction and energy savings. By expressed statement, for example, EASME’s officers referred to this point as the inspiring reason when building MLEI, which followed EIB-ELENA. A clear

link, in this light, arose from the survey responses about the inclusion of the PDA funded initiative into a sustainable energy action plan at local level, being them either the SEAPs developed under the CoM or other plans.

It’s too early to state that such objectives have been met, as highlighted in all the interv iews with the Managing Entities and, together, as shown by the progress status of most projects funded by the PDA facilities. It can be said, instead, that, even looking at the data related to the estimated economic, environmental and energy impact shown in the prev ious paragraphs, the seeding effect of the Programme ha ve been achieved and the role

play ed by the PDA facilities by enabling local authorities to bring their plans forward can be considered as a desired result.



Capacity of addressing needs, problem s and challenges

From the interv iews with the Managing Entities, the need to cover the gap between the local authorities ambitions and their competence clearly arose. Both the survey and the site v isits questionnaires have been designed in order to depict this gap and provide figures showing, firstly, the real existence of this limitation and, secondly, to appreciate the impact of the PDA facilities on it. The on -line survey and the site v isits provided

consistent results, as shown below.

”The PDA programme is an efficient measure that provides assistance for the preparation of project activ ities to

pursue EE investments . It goes to the real m arket gap. Who designed it, for sure has a v ery deep knowledge of the

energy efficiency m arket and related issues.”

Interview with the Province of Chieti – Chieti project

“The lack of capabilities would have been critical to deliver the project and it would not exist without PDA. The PDA

enabled ADENE to conv ene an experienced taskforce capable to deliv er the needs of this project. ”

Interview with the ADENE – Eco.AP project



Figure 32 - - On-line survey questions n. 12




To what concern technical capacity , usually public administrations have good capabilities in dealing w ith business as usual projects and tender procedures. However, it arose from interv iews that public structures rarely have strong technical competences to cope with more innovative and complex projects in the sustainable energy field. Strong competences have been found where dedicated department/agencies are established, but any way they need external help when dealing with large energy audit programmes.

On the contrary , the specific legal and financial competences are missing in most Pas. For instance, the establishment of new EPC framework, in which the bankability of projects and the tender procedures is still an

hard issue to be tackled by PAs alone.

As highlighted in Figure 34, the need to overcome these lacks of competences led to the creation of work team formed by professionals with different skills capable to collaborate in order to set up v iable projects. These have been formed mostly by hiring external competences, while internal resources have been designed for managing deals. Figure 34 also shows the activ ities carried out within the funded projects. These activ ities refer to the



entire set of tools needed in the chain of investment preparation, from the very initial phase to the final tendering procedure. Finally Figure 35 depict the same analy sis done for the 36 v isited projects.

With regards to the three major PDA facility , the following results can be highlighted for each facility :

EIB: granted projects which eligible costs are homogeneously dedicated to all the foreseen activities.

KfW: it emerged that a great proportion of the eligible costs refer to technical studies. This is particularly true for the Austrian small projects (funded by ERSTE Bank) in which th e technical part was the most

required activity.

MLEI: As already highlighted within the report, EASME put much more focus on activities dedicated to develop innovative contents on initiatives. In this light, MLEI funded cost are mostly reserved to financial engineering, PPP tendering procedures and stakeholder involvement.



67%

33%

What is/was the Project Development Assistance funding used for?

BENEFICIARIES (48)

Mostly hiring competences from the market

Mostly increasing internal capacity



Figure 35 – Distribution of the activities funded by the ELENA/MLEI facilities for the 54 interviewed projects

Source: PwC elaboration on data coming from the site-visit activity

3.2.3 Effectiveness and Efficiency Effectiveness and efficiency of the PDA facilities have been largely investigated by using all the data collection tools deployed in the first phase of this evaluation. It shall be stressed that a significant part of the responses about the Programme’s effectiveness have been provided when dealing with impacts and achievements (see Paragraph 3.2.1). In this paragraph, a feedback is given about the other questions the Commission put forward

since the inception stage about the clarity of the participation rules, the capacity of the different facilities and of the Managing Entities to attract the appropriate beneficiaries and the communication activ ities effectiveness. Hints are provided on the facilities management efficiency, which shall be further analysed going forward in the evaluation exercise. Then, from Section 3.3 onwards, a specific assessment of the procedures set up by the different managing Entities is presented, with a more detailed description.

Legal fram ework

By legal framework, we mean the main c ontractual rules for participation to the PDA programme and take

benefits out of it like, among others, the need for:

delivering v iable projects under the technical, juridical and financial point of v iew;

complying with the minimum leverage factor foreseen (ELENA x20 1 4, MLEI x15);

keeping the pace in order to get to a result in three y ears;

setting up resources for co-financing the project development phase (10% for ELENA, 25% for MLEI);

limiting the PDA contribution to the project preparation phase, without going beyond to the implementation phase;

setting up innovative mechanisms for delivering projects, from the organisational, contractual and financial point of v iew.

14 For the first two budget y ear the ELENA EIB’s lev erage factor was 25

0%

20%

40%

60%

80%

100%

Feasibility and marketstudies

Technical design

Business Plan andfinancing scheme

Energy AuditsPreparation of

tendering proceduresad contractual…

Financial Engineering

Stakeholder andcommunity mobilisation

CEB EBRD EIB KfW MLEI



The overall legal framework has been clear and tidy descripted to the market and to all t he applicants. This assessment derives from the ev idences of the desk research analy sis. In fact several accesses to detailed

documentations were available on the EC and Managing Entities’ web sites. However it can be said that such level of detail was not sufficient to allow all kind of applicants to be completely independent and self-prepared to the requirements of ELENA or MLEI facilities. The Managing entities provided a wide help to the applicants and performed a fructose communication activ ity in orde r to advertise the PDA facilities. This brought a significant contribution in the clarification of the overall framework. Although in many cases a lack of awareness was there at the very beginning of the application procedure, through the relationship with the Managing Entities this gap was covered and, in many cases, this led to successful outcomes. Thanks to the

information received, they were able to understand the scope of the programme and to make their application compliant with the PDA requirements.

The outcome was not alway s easy to obtain. In fact, the requirements have been strict, demanding and have had a strong importance in the selection of the investment. In this way the funds for Technical Assistance proved to be a no free-lunch, and

a productive effort was asked to the applicants in order to obtain the contribution. Despite not all the interviewed beneficiaries got immediate access to the PDA, this allowed the selection of projects that might make sense and whose business plans enjoy the characteristics of bankability , sustainability and efficiency .

Leverage factors have not been a barrier but rather an useful instruments for two reasons:

It has stimulated a considerable amount of potential local investments;

It was employ ed as the immediate instrument for the control and monitoring of the project.

The most part of the respondents, especially those with projects underway , learnt how to balance PDA funds

expenditure with investment amounts. A balanced use of the PDA can limit exposure to the risk of returning funds to EC. The judicious use of the funds is a skill that can be delivered in the several meetings between project promoters and it represents one more reason to encourage the dissemination activ ities.

While in the western European countries the leverage factor did not affect a wider use of PDA facility , it can hamper the competitiveness of PDA programme in eastern countries since:

competing funds, like the MFF-EE require a much lower

leverage factor (1 to 5);

the risk of pay ing back the cost of technical assistance, if the investment multiplier is not met, discourages smaller entities from using the PDA serv ices.

Additionally the grant environment in these countries should be further investigated in order to assess whether it is acting as a

hindrance for the development of bankable investments.

On the side of the benefic iaries, the leverage factor has been appropriate since it is an incentive to be result -oriented and it is an obligation preventing from the risk of political commitment changes. At the same time, from the site v isits activity some beneficiaries reported that the leverage factor is not an incentive and, the other

way around, it push local authorities to more manageable and cheaper investment.

A reason of the unachieved effectiveness of the PDA programme in Eastern Member States must be chased also in the “grant culture” affecting these areas. In fact, in the ESIF Programming Period 2007 -2013, starting from 2011 the energy efficiency has gained an increasing importance and, as highlighted below, much resources coming from the EU have been allocated to cover this issue.

Table 10 - ERDF resources under the Convergence Objective (not only for EE projects, from 2007 to 2013).

T OT ERDF [B€]

FROM EU [B€]

Bulgaria 3,8 3,2

The ov erall framework has been perfectly

explained by KfW in a meeting in Paris. The

administrative and technical structure of the

Région Bretagne was capable to produce all

the requested information. However, it is to

be noted that the administrative procedures

are burdensome and sometimes quite

complex. They should be streamlined and

simplified.

Interview with “Vir´Volt-Ma-Maison”

Especially for small Eastern European local

authorities the leverage factor of 20 is in

most cases a border line scenario. Differently

from the western countries, such local

authorities have difficulties in bearing the

risk of returning the received contribution.

Interview with EBRD



Czech Republic 15,8 13,4

Estonia 2,1 1 ,9

Hungary 13,2 11 ,2

Latv ia 3,1 2,4

Lithuania 4,3 3,4

Poland 40,5 33

Romania 11 9

Slovakia 7 6

Source: DG-Regio public data.

More specifically:

In Bulgaria €2.8billion (42% of fund allocations) has been allocated to support environmental, risk prevention and energy projects. This massive investment is designed to help Bulgaria comply with EU environmental rules and address the challenges of climate change.

In Czech Republic the support for energy efficiency and renewable energy accounted for over €1billion.

In Estonia, Environment– improving the environment and promoting sustainable growth have been the main strategic priority. Investments worth more than €1billion are planned to contribute to meeting the EU environmental requirements by 2010.

In Latv ia, improving the environment, promoting sustainable growth and combating climate change have been key priorities in the 2007 –13 period. Nearly €1 billion of the allocated funding has been set aside to improve the environment and finance risk prevention measures. In addition, 50 hectares of polluted areas will be rehabilitated and up to 7 3 energy efficient social houses supported. Around €128 million is foreseen for measures that will directly contribute to combating climate change.

In Lithuania, cleaning up the environment, promoting sustainable growth and combating climate change

have been key strategic priorities in the 2007–13 period. Investments of over €2.4 billion (nearly 36% of the total Structural Fund allocation) are planned. Of this amount , €1 .1billion will target the effects of climate change and €437million to promote the use of renewable energy and improve energy efficiency.

The Polish authorities introduced energy efficiency as an horizontal principle in all programmes this is

reflected in the project selection criteria. In all, some €2.2 billion, or 3.4% of total fund allocations, will be invested in this area.

In Romania €2.8 billion (14.6% of the total Community contribution) has been addressed to areas directly contributing to climate change mitigation, with projects on energy efficiency and renewable energy set to benefit from €604 million.

In Slovakia the allocation for mitigating climate change has been about €1.7billion.

The abundance of “easy resources” dedicated to sustainable energy projects could have discouraged Eastern countries’ Public Authorities to look for more innovative (non-grant) way s to conduct and develop projects.



The three y ears period for developing projects presented for funding is a challenge, especially in countries where approval and tendering processes can take a long time. Examples of flexibility have been

reported, in case of force majeure . The current maximum duration could be too short for deploy ing complex energy efficiency projects. This consideration is made by banks and many be neficiaries. Survey ed actors’ opinion confirm this is a point of weakness of the PDA, as presented in Figure 36.




Regarding the innovation content, while for EASME operational and financial innovation are crucial criteria within the evaluation process, for EIB innovation is not the main driver for successful application. This

assessment emerged by the interv iews with those MEs. In the same context, looking at the experiences

“Although leverage factor is an essential feature of the ELENA facility, since it is a strong incentive to achieve the

expected results, it is not an incentive to achieve relevant results in the most financially and technically sustainable

way. Furthermore it does not take into account climate differences: each single Euro in TA spent in southern Italy in

energy efficiency assistance leads to less investments and savings than the same Euro spent in northern Europe.”

Interview with the Province of Chieti – Chieti project

“It is worth to remark the fact that using leverage as single indicator of success leaves aside many interesting projects

on emission reduction that for not being expensive are less attractive as larger number of them would be needed to

reach the leverage objective. It could therefore be interesting to turn to some kind of climat ic leverage that considered

not only the return on investment but gave monetary value to the emissions cut.”

Interview with the Province of Barcelona - DIBA project

“Expected returns of the projects (in terms of energy- and CO2- saving) have to be taken into account at the application

phase. Currently, the simultaneity between the PDA and the expected results which have to be taken into account

penalises the selection of the most pertinent projects in t erms of energy- and CO2- saving”

Interview with the Société du Logement de la Region Bruxelles Capitale (SLRB) - VAMOS project

“Based on our experience the minimum leverage factor is not a limit. But we can state that the maximum duration of 36

month is too short for the deployment of complex energy efficiency projects. Maximum duration should be at least 48

months.”

Interview with EIB



developed by KfW by means of the PFIs, innovation examples are reported as the collaboration between local banks and public authorities in order to deliver bankable projects, that in some cases has been per se very

innovative . In fact, innovation should be considered within the collaboration among involved actors, although the financial instruments used could be not really innovative.

The cases highlighted from the analysis of the ELENA KfW project s suggest that, most often, local authorities did not have neither the competences nor the appealing to develop those projects involv ing the private sector. For this purpose local banks can be more able to face the business side of the projects.

Any way, some pros and cons have to be highlighted in the application of this schema . The level at which this is introduced is a crucial point. The experience shows that PDA used to support non-bundled project developed by

very small local authorities resulted in the funding of business as usual activities. As highlighted in the following chapters, in the coming y ears, it would be preferable to develop national schemes to address such kind of small projects, using dedicated resources coming e.g. from ESIF.

More appropriate has been the level at which operated BPCE, which targets were Regional and Provincial authorities and in which the innovativeness of the PFIs approach is more effective. As for the Pay s Voironnais project, the collaboration among local banks and lo cal authorities has created an innovative way to deal with

the refurbishment of private houses, target that would not have been reached by the public authority alone. To do so an innovative loan line have been created, and the project funds have been used by the local public authority to:

perform communication activities in order to engage owners of condominiums to take part to the initiative.

develop a credit line provided by KfW to BPCE and in turn to the sub-bank to finance directly the

manager of the buildings, and not the single apartment owners. In doing this the sub-bank recognised the fundamental function of the Global Loan received.

a warrant issued by the bank to the owners of the apartments in order exclude them from the risk of the project.

The same collaboration between local banks and local authori ties is not falling into the scope of project development assistance in all cases. While the BPCE facility created bundles of projects by addressing aggregator PAs, Austrian projects financed under ELENA KfW stands alone with no link to each other and without creating innovative mechanism or reduction in transaction costs.

Finally the EBRD believes that the PDA’s legal framework in eastern Europe should be more flexible, not only regarding the limitation of the funding scope to project preparation but

also looking at the innovation content, which cannot be the same in that area compared to the western EU countries.

Although the programme has been found flexible enough to be adapted to different type of investment, some beneficiaries stated that there should be more possibility to adapt it to the local context. In that sense, national schemes using dedicated

resources coming from the Cohesion Policy Programmes might be more adapted to these local needs.

T argeted beneficiaries

As foreseen by the Intelligent Energy Europe programme, ELENA and MLEI facilities are intended to attract different kind of beneficiaries, targeted by the amount of investments they can generate. Namely :

ELENA-BEI aims at supporting investment greater than 50M€;

ELENA CEB, ELENA EBRD aim at supporting investment greater than 6M€ and up to 50M€;

ELENA KfW, aim at supporting Investment Programmes coming from financial institutes greater than 6M€ and up to 50M€;

MLEI supports investment greater than 6M€

A fast check of the Managing Entities’ compliance with these requirements have been performed as shown in Table 11 where project funded have been reclassified on the base of the investment amount. Furthermore, all the investment have been reclassified with respect to the nature of beneficiaries attracted as shown in Table 12.

With regards to the ELENA -KfW facility it has to be highlighted that only 3 of the 6 PFI whose Investment Programmes have been approved, effectively delivered grants to final beneficiaries. Furthermore the budget allocated in Austria has been fragmented among several small projects suffering the absence of a strong link to

These kind of programs are designed for a large

group of countries and, in some aspects it

would be good to have a more tailored approach

to each country and region situation.

Interview with “Vila Nova de Gaia”



each other and hampering the innovative cooperative mechanisms. In such case, the role of aggregator of the PFI has not been appropriate.

Table 11- Reclassification of projects with respect to the total amount of investment

Managing Entity # projects < 6 M€ >6 & <50 M€ > 50 M€

EIB 41 - 8 33

EASME 22 - 22 -

KFW to PFI 15 6 0 4 2

PFI to beneficiaries 30 23 6 1

CEB 3 - 3 -

EBRD 1 1 - -

T otal 94 24 39 34

Table 11 shows that ELENA-EBRD has, so far, supported investments lower than initially expected, and that ELENA KfW has resulted in six PFIs agreements covering the expected amount of investment. On t he other hand it has supported so far a number of really small projects in term of investment.

Table 12 - Reclassification of projects with respect to the nature of beneficiaries.

Managing Entity

Local authority Public Com panies/Agencies

Grand T otal

Local Coverage

Regional Coverage

Local Coverage

Regional Coverage

CEB 1 2 3

EBRD 1 1

EIB 16 13 8 4 41

KfW 21 4 5 30

MLEI 16 3 2 1 22

Grand T otal 54 20 17 6 97

Efficiency in m anaging PDA facilities

In order to understand the level of efficiency ensured by the Managing Entities in operat ing the PDA facilities, in this paragraph the total fee gained 1 6 and the beneficiaries’ satisfaction are presented.

As explained within the Contribution Agreement the four ELENA Managing Entities were authorised to withdraw annually in arrears from the Trust Account part of the EU contribution as a percentage of the grants committed in contracts for the Project Development Assistance Serv ices s igned during the y ear concerned. Furthermore, some of the Managing Entities are allowed to make additional withdrawals as starting or success

fees. Terms and conditions are different per Managing Entity and vary among budget years. Table 13 shows the final results of the calculations1 7 . The table shows also, as in indicator of efficiency , the ratio between the withdrawn managing fees and the total amount of investments planned in the grant a greement signed so far with project beneficiaries. Although not very representative for CEB and EBRD, these ratios show higher leverage costs for the KfW model compared to the EIB model. Different reasons could explain these differences, including e.g. the combination of the PDA activ ities with a global loan from KfW and the size of projects. In addition, in analy sing such data, it has to be taken into account the different implementation schema of the

ELENA-KfW facility in which the managing fee is calculated on the basis of the contribution provided to the

15 The extent of the investment has been calculated using the ELENA contribution awarded to PFI and a lev erage factor of 20. 16 Only the ELENA Managing Entities are subjected to a Management Fee that depends from the EU contribution committed in contracts for Project Dev elopment Assistance. EASME manage the MLEI programme using resources from its ov erall balance sheet.

17 The main comparison can be conducted only between ELENA facility. For a lack of relev ant information it’s difficult to hav e a benchmark of the “operational costs” incurred in other EU facilities prov iding the same ty pe of serv ices.



PFIs that have not already turn the whole grant amount to final beneficiaries. Therefore, an effective assessment of the efficiency of the ELENA KfW facility will be possible only after the programme termination.

Table 13 - Management Fee calculation for each ELENA facility.

2009 2010 2011 2012 2013 Total M.Fee

/ Pla nned

inv . [k €/m €]

M.Fee /

T A gra nt .

[k €/m €]

M.Fee (% of EU

Con tribution ) MEs

M. Fee [€]

M. Fee [€]

M. Fee [€]

M. Fee [€]

M. Fee [€]

M. Fee [€]

CEB - - - 5 7 .2 5 0 - 5 7 .2 5 0 0 ,7 7 2 9 ,5 4 3 %

EBRD - - - - 5 .2 5 7 5 .2 5 7 0 ,9 9 2 0,00 2 %

EIB 552.704 5 9 6 .4 00 6 83.2 8 5 7 7 3 .4 8 2 2 97.8 5 2 2 .903 .8 04 0 ,6 2 3 9 ,8 5 4 %

KfW

- 9 8 .06 3 9 7 .5 3 8 - 1 9 5 .6 00 1 ,08 3 1 ,6 5 3 %

Total 552.704 596.400 781.348 928.269 303.109 3.161.911 0,64 38,92 4%

Regarding loans granted by the managing entities to the awarded projects , the results coming from the interv iews and the site v isits are summarised in the following po ints:

CEB: even if considered, only one of the three funded project made use of loans delivered by CEB.

EBRD: in the only one funded project the use of EBRD resources is still under disc ussion.

EIB: even if several projects have considered using the proposed EIB loans, so far only one1 8 case of effective use has been highlighted during the 36 site visits activity.

KfW: all the PFI granted with the ELENA fund have (by default) received credit lines from KfW. Details

on the requested interest ratio have not been delivered. Amounts and recipients of loans are highlighted in Table 14.

Table 14 - Loans committed by KfW.

PFI Signing date

Global

Loan [M€]

Num ber of sub-loans approved

Volume of approved sub loans

[M€]

Num ber of sub-loans disbursed

Volume of disbursed sub loans

[M€]

BPCE 26/10/12 100 323 1 ,76 321 1 ,64

Deutsche Bank 10/10/13 49 - - - -

Erste Bank 13/11/13 49 2 1 ,45 2 1 ,15

KommuneKredit 27 /05/14 48 - - - -

Bank Handlowy 19/12/14 40 - - - -

CDP 19/12/14 40 - - - -

T otal 325 325 3,21 323 2,7 9

Source: KfW (Data updated to 31/12/2014)

In order to evaluate the efficiency of the PDA facilities, focus has been given also on the beneficiaries’ satisfaction taking into account the entire application process, from preliminary approaches to the project preparation.

Regarding the way the beneficiary bec ame aware of the opportunities available under the Intelligent Energy Europe Programme, the survey provided a clear description of the media which demonstrated to be more

effective. Figure 37 clearly shows that most part of beneficiaries were attracted by web media or got aware through other channels as regional offices, offices of European association (e.g. Energy Cities, Covenant of May or) and personal contacts.

18 At the end of the first tender procedure carried out by the Province of Milan, one of the four winner ESCOs make use of the fund deliv ered by EIB and managed by Mediocr edito Italiano.



Figure 37 - On-line survey question n. 19 and 20

Th e Score in th e x -a x is (r h s g r a ph ) r epr esen ts th e per son a l ev a lu a t ion ex pr essed by th e su r v ey ’s pa r t icipa n ts.


The chart also clearly indicates that communication actions have not been so effective in raising awareness about the funding opportunities. Beneficiaries were also asked to express a numerical judgement on the adequacy of the communication measures put in place by the managing entities. The results illustrated in the

second chart of Figure 37 shown that the beneficiaries hold on average a low opinion over the communication strategies followed so far. Any way , answers are quite dispersed.

The same results also come from the interviews held during the site v isit activ ity . The opinion of beneficiaries results to be very heterogeneous: if, on one hand, some beneficiaries claim for an improvement in the communication activity, on the other, one some of them assess that the communication strategies implemented are clear and capillary enough.

The web-sites architecture has been limited to the minimum requirements and provided basic in formation on the grant opportunities. At a glance each site seems to be standing alone and not homogeneously developed, therefore a common communication strategy seems to lack at the moment. A standard Google search revealed that sites can be find only using very specific key -words.

Regarding the application procedure, the following main difficulties have been highlighted:

difficulties in understanding which cost are considered eligible;

difficulties in having an ex-ante estimation of investments;

language barriers.

A qualitative judgment of the difficulties encountered is given in the chart shown in Figure 38.



Figure 38 - On-line survey question n. 26, 21 and 22


Source: PwC elaboration on data coming from the online survey Due to such difficulties and to the lack of employee specialized in developing EU-support applications, several awarded public bodies referred to external consultants to manage the application procedure, as attested by

beneficiaries and two of the Managing Entities (CEB, KfW and related PFIs).

With regard to the KfW facility , it must be highlighted that two different kind s of approaches were developed. In BPCE one local bank and final beneficiar ies collaborated from the very beginning of the application procedure. Furthermore, application documents were translated only at the end of the procedure and was a valuable point in overcoming language barriers.

In general it has to be underlined that the preparation of a PDA application may be a challenging procedure

that foresee the collaboration of different department (e.g. technical, legal and European Policy etc.) among the same public authority. The recourse to external consultants happened in smal l authorities (e.g. in Austria) or in specialised public agencies (e.g. Social Housing Associations) in which one, or more, of the needed competences were missing. The presence of beneficiaries which did not fit with the application procedures also arose from the on-line survey ’ results presented in the first chart of Figure 39, which presents an important tail of low scores.

In order to investigate the willingness of Managing Entities in ensuring adequate support during the application

or negotiation phase, the survey asked the beneficiaries to rate the quality of the received help. Results are also depicted in the second chart of Figure 38 and in the first one of Figure 39.

Results of this question are in line with the findings of the site v isit activity in which almost all the beneficiaries experienced a very constructive collaboration with Managing Entities during the application or negotiation phases. Despite this collaboration contributed to clear up doubts and to find a common way to operate, in some cases beneficiaries faced a lack in flexibility and very challenging requests.

Regarding possible improvements, the survey gives the opportunity to beneficiaries to share their opinion.

Through survey question n. 28, 23 advices have been collected. The main important points highlighted are:

the need for more clear rules regarding the eligible costs;

the need for relevant examples to be used in the application procedure;

the need for easier and faster procedures.

As for the arranged disbursement programmes, in most cases the programmes have been compliant with the project requirements since the direct interviews addressed to beneficiaries during the site v isit activity find that both the timing and the amounts were compliant with the needs of the project costs. Nevertheless, this procedure was not always standardized and sometimes led to few discrepancies among di sbursed grant and real expenditure. This may be an issue in Public Authorities affected by financial resources scarcity .



In the light of the dissemination and replication purposes of the programme, an important role will be play ed by the promotion activities. The survey gave us the possibility to evaluate what is the level of engagement of this

activ ity. The second chart of Figure 39 clearly illustrate that the whole chain of parties involved in the project will be committed to disseminate the project results.

As a final judgment on the importance played by PDA in targete d beneficiaries, the survey asked to beneficiaries if the whether the PDA has been a key factor in the development of the initiative. Results are depicted in Figure 40. In those questions we analy sed the elements of necessity for a PDA facility , while in the question 81 in addition to this aspect we considered the potential coexistence with any alternatives to the PDA at EU level.

Figure 39 - On-line survey question n. 27, 55, 75 and 79

Th e Score in th e x -a x is (lh s g r a ph ) r epr esen ts th e per son a l ev a lu a t ion ex pr essed by th e su r v ey ’s pa r t icipa n ts.

“A main advantage was the fast forwarding/disbursement of the money at an early project stage. Thus, the incurred

planning costs could be cov ered alm ost com pletely , which ensures a high quality of the planning process. ”

Interview with the Municipality of Baden

“The disbursement programme is not compliant with the needs of the project because there is a m ismatch with the

budgeted that causes liquidity problems.”

Interview with the Zero Emission Busses Foundation

“The program of disbursements could be designed in a better way to match outgoings and costs.”

Interview with the Greater London Authority



Figure 40 - On-line survey questions n. 52, 70, 73 and 111



3.2.4 Sustainability

Long lasting im pact

When it comes to sustainability , the most valuable lasting impacts of the PDA programme shall refer to:

the creation of new skills and competences, able to deliver additional projects;

the creation of innovative operative and financial schemes, likely to be replicated

About capacity building, although most of the projects are still in the implementation phase, in the EASME’s view some successful cases are ev ident. In their v iew, funded projects have shown a gradual increase in the ability to support themselves from the point of v iew of the capacity made available within the local authority . Any way , as underlined by EIB, there are very heterogeneous cases. The main difference lies in the ty pe of project implementation unit set up by beneficiaries: whether it is composed by internal employee or by external consultants. In the first case, operational skills will remain embedded in the public administration bodies and they will have the capabilities to replicate projects on their own. Where the municipality is small and

investments cannot be huge, this is not the preferred way to go. In the second model, Public Authorities enhance their project management capabilities, but rely on specific skills of external consultants, limiting thereof the capacity building effect. A quantification of this difference is delivered by the on-line survey which asked to beneficiaries which model they implemented. Results are shown in Figure 41 .





The on-line survey has given the opportunity to investigate the capacity building issue involv ing a wide basket of respondents well distributed among facilities. The results, as illustrated in Figure 42, show an ev ident difference between the MLEI and ELENA beneficiaries’ judgment. Since the survey has been developed in order

to guarantee the anonymity of respondent, it is not possible to split the results by facility . Furthermore, it is hard to depict a common judgement for each single facility from the analysis of the site v isit interviews. Indeed, despite almost all of beneficiaries interviewed recognised a capacity enhancement and many of them are willing to undertake similar project in the future , the answer collected are quite inhomogeneous.






Project replication

Although, as highlighted by EASME and CEB, relevant results are still to come and the ev idence of r eplicated cases around Europe are very few, EASME is convinced that the MLEI PDA has reached the objective of creating a mechanism useful for the replication of similar projects at local level without the intervention of additional technical assistance. The replication is one of the most important evaluation criteria to understand the potential effect on the local context.

It is the opinion of KfW that the potential for replication changes from case to case and from country to country. ELENA seems to be very effective to this purpose, especially for small municipalities. In this light, BPCE stated

that the close cooperation among financial institutions and local authorities created a suitable environment in which investments in sustainable energy are acceler ated. Any way , this has not transformed the market y et, results are good but not enough, and the facility need more time to catch on over wide scale.

To the aim of creating innovative replicable schemes, EBRD is convinced that ELENA could be a very suitable instrument. However, EBRD had difficulties in using it within the countries it operates.

The issue of replicable models has been addressed even during the site v isits and Telco interv iews carried out

with beneficiaries. Almost all the beneficiaries respo nded that their model has a potential to this purpose.

Many beneficiaries stated that their example led other local authorities to apply for PDA grants. Nonetheless, cases of replication outside the PDA programme are not ev ident. In this light, it has to be noted that some beneficiary stated that, even though the high potential for replication, it will be difficult that other public bodies will replicate their experience without a technical assistance since many project features need to be tailored . The v iewpoint of beneficiaries is supported by the on-line survey results which the answers of beneficiaries are coupled with the ones of the third parties involved. Results are shown in Figure 43 which aims at reporting the

possibility to replicate the project in similar administrative context.

As for the replicability of the PDA as a concept at the regional level under the Cohesion Policy Programmes it must be said that in the past Programming Period the European regional Managing Authorities did not put attention to this opportunity. Also in the light of the Directive 2012/27 /EU, as highlighted in the conclusions and recommendation chapter, it will be important that DGREGI O and DGENERGY collaborate in order to create the suitable environment and to enhance the awareness to develop national PDA programme addressing in particular small-medium projects.

In few cases encountered during the second stage of interv iews, replicability has been assessed as a difficult target to be reached once considered a possible future scenario without a technical assistance. In those cases the specific explanations are different but they actually share the same negative expectations based on the lack of financial resources.

“The model that has been developed by the Région Bretagne is certainly replicable in other regions. Howev er, it

would be difficult to implement such a project without any technical assistance, especially for the administrative and

IT parts.”

Interview with Region Bretagne – Vir’volt-Ma-Maison

“Yes, but the model that has been developed by Energies POSIT’IF will not be easily replicable without the Technical

Assistance. Actors from the public sector have very limited business skills. Thus, to allow the implementation of a

project like that of Energies POSIT’IF, the public sector would need technical assistance for tasks such as the

dev elopment of a business plan, the negotiation process with potential investors, etc..”

Interview with Energie POSIT’IF

“We feel that our technical and legal/contractual activities are immediately replicable in their principle in other

market contexts on condition that certain changes be applied in according to specific and particular characteristics

that em erge from the territory involved.”

Interview with Province of Chieti

“Such a project is generally not feasible without technical assistance and therefore not replicable in other regions.”

Interview with Municipality of Payerbach





3.2.5 Coherence and Synergies Regarding the creation of sy nergies with other funds, KfW and CEB highlighted the possibilit y to integrate the PDA grants with other national schemes useful to foster the investment phase. To this regard, the site v isits

activ ity highlighted some cases in which the use of other EU or National funds have been successfully experimented or shaped in order to fulfil the investment requirements. Among these the following are noteworthy :

MARTE: the Marche Region adapted the Regional Operative Programme 2014 -2020 in order to integrate the developed EPCs with ERDF grants and a revolving fund.

ZagEE: triggered investment will be co-financed with EPEEF - The Environmental Protection and Energy

Efficiency Fund of the Republic of Croatia sources. The EPEEF will co -finance 40% of total investment costs on the basis of the Agreement between City of Zagreb and the EPEEF.

Province of Modena: AESS is collaborating with Regione Emilia Romagna in order to establish a Revolving or a Guarantee funds in order to boost investment through EPC contracts.

From the interv iews held with project promoters arose also that a strong cooperation and a stable communication channel with Managing Authorities is fundamental in order to build innovative schemes that embed EU structural funds.

In this light, the example of the Abruzzo Region can be quoted as a negative example. Indee d, from the interv iew carried out with the two beneficiaries of the province of Teramo (PARIDE project) and of the Province of Chieti, it clearly emerged that the absence of communication among the regional and the provincial authorities did not allow to establish sy nergies between the ELENA/MLEI programmes and the regional

cohesion funds.

Finally , the survey allowed to gather a qualitative judgement over the sy nergies that the projects had with existing programmes. Results are depicted in Figure 44.






Regarding the overlap of the PDA facilities with other existing facilities, as highlighted by KfW and EBRD, in the eastern counties the PDA programme is facing a competition with the Municipal Finance Facility fund. The MFF is an initiative of the European Commission and the European Bank for Reconstruction and Development

(EBRD) to develop and stimulate commercial bank lending to small and medium-sized municipalities and their utility companies in the EU countries who joined the EU in 2004 (Estonia, Hungary , Latvia, Lithuania, Poland, Slovak Republic and Slovenia with Bulgaria and Romania). The facility combines EBRD fina nce in the form of long-term loans and/or risk sharing. This fund has a very low leverage factor required (1:5). Even though a lower leverage factor may be a constrain hampering the effective development of investment, it must be considered that for Eastern European countries’ municipalities the grant restitution risk may be perceived

differently than in Western ones.

Beside this, in Eastern Europe developing country , EBRD set up the Sustainable Energy Initiative (SEI). The SEI was launched in 2006 with the aim of scaling up sustainable energy investments in the EBRD’s region, improving the business environment for sustainable investments and removing key barriers to market development. The programme uses the full range of the bank’s financial instruments t o finance sustainable energy projects and has developed a unique business model to finance energy efficiency and renewable energy projects, combining investment with technical assistance and policy dialogue. Even if public authorities are not

in the main scope, the technical assistance delivered by EBRD to support clients with project preparation and implementation offers products such as market analy ses, feasibility studies, energy audits, and training and awareness raising. However, EBRD didn't manage to fully exploit the possible sy nergy between their SEI initiative and the ELENA PDA facilities. One of the reasons of this miss -opportunity is the mismatch between its modus operandi and the ELENA features. Furthermore it has to be highlighted that, compared to the whole amount of funds make available to EBRD by donors, the ELENA -EBRD resources were not enough to justify the establishment of a dedicated structure able to face the ELENA requirements.

As for the western European countries, always KfW, indicated that in Germany ELENA has only limited added value due to the presence of national schemes that are more closer to the final beneficiaries. Interviews with the French BPCE highlighted that in France, even if a long dialogue with the French government has been carried on, no facilities similar to the PDA have been developed y et.

Another EU facility that is worth to be analy sed is the European Energy Efficiency Fund (EEEF) launched by the European Commission on 2010 in coordination with EIB. The EEEF was equipped in 2011 with a Technical

Assistance facility of 20M€ that is provided only to the EEEF Beneficiaries to support project development with a grant for up to 90% of the total co sts. The EEEF technical assistance can be requested for: feasibility and market studies, project structuring, business plans, energy audits, preparation of tendering procedures and contractual arrangements, financial structuring and funding preparation/documentation and include any other



assistance necessary to develop investment projects or projects to be submitted for financing under the fund. The facility is managed by Deutsche Bank and until now 16 public authorities benefited from the EEEF

technical assistance facility in countries such as Spain, Portugal, France, Denmark, UK, Ireland, the Netherlands and Belgium. Through these TA projects, EEEF managed to initiate significant investment programmes in each of the Member States, up to a total volume of a pprox. 450 M€, helping to reach the ambitious targets of the EU regarding climate protection. Even though that the EEEF technical assistance facility was available until 31 March 2014, it has to be highlighted that a sy nergy between the EEEF and the PDA facilities may arise. In fact, nothing prevents the projects financed through EEEF to apply for the PDA Technical Assistance.

Among the 54 interviewed projects, sy nergies among ELENA initiatives and the EEEF funds arose only in the DIBA projects in which the funds made available by EIB were made available to ESCOs through EEEF ( Deutsche Bank).

3.3 Evaluation of MLEI-PDA

3.3.1 Brief description of MLEI-PDA’s features

The MLEI-PDA ’s scheme was born in the work that DG Energy and the Intelligent Energy Europe Programme had done for about 7 years before that with public authorities, alongside the political engagement that May ors all over Europe took by signing their Sustainable Energy Action Plans within the Covenant of May ors initiative. After this movement gained momentum, a gap was observed between the likely availability of funding and the capacity of Municipalities to put their plans into action. This was exactly the point where MLEI-PDA facility was supposed to act. Thus, MLEI-PDA facility ’s focus stands at municipal level, where that gap of capabilities exists.

MLEI-PDA has been managed since 2011 by the EA CI (now EASME) and it provides Project Development

Assistance for public authorities to prepare, mobilise and launch investments in EE and RES and operates as a complement of the ELENA -EIB facility . The first call was published in 2011 under the Intelligent Energy Europe Programme. Among others, MLEI-PDA:

helps to overcome the lack of technical capacity, particularly small and medium sized municipalities;

bridges the gap between sustainable energy policies planning and their implementation, translating them

into bankable actions;

accelerates public energy investment in Energy Efficiency, Renewable and Clean urban mobility;

supports organisational and financial innovation.

Differently from the others MEs, EASME allocates funds launching call for proposals, performing the same competitive procedure which the other IEE projects (and now, H2020) go through. About distinctive MLEI-PDA ’s features:

the leverage factor is calculated on the Project Development Cost ( rather than on contribution) ;

the minimum leverage factor is x15 (against x20 of ELENA)

the maximum contribution covers the 75% of the Project Development Cost (against the 90% of ELENA).

3.3.2 Impact/Achievements Investm ent uptake

MLEI-PDA counts 22 projects awarded for a total contribution of Euro 15.936.210 and an amount of planned investments of Euro 482.848.577 . During the site v isits activity, 18 projects have been selected

and the related beneficiaries interv iewed.

Table 15 EASME - Contributions

N. of Project s

Con t ribu t ion

(A )

Disbu rsed Con t ribu t ion

(B)

progress %

B/A

MLEI-PDA – Interviewed 1 8 € 14.403.034,00 € 6.474.800,03 4 5%

MLEI-PDA – Non interviewed 4 € 1 .533.176,00 -

T otal 2 2 € 15.936.210 -

Source: PwC elaboration



Table 16 EASME - Impacts on Investments

A v era ge Lev era ge

Pla nned Inv est m ent

(A )

Cu rrent inv est m ent

(B)

%

B/A

A vera ge size A v era ge cu rrent

invest m ent

MLEI-PDA - Interviewed

30,21 € 435.090.905,00 € 9 8.609.152,00 23% € 24.171.716 € 5 .478.286

MLEI-PDA - Non interviewed

31,15 € 47 .757.672,00 - - € 11 .939.418 -

T otal 30,31 9 € 482.848.577 - - € 21.947.662 -


The contribution actually disbursed reached 45% of the total contribution and the investment progress is 23% of the planned investments20. In the MLEI-PDA pipeline, only one project can be considered finished21 .

Table 17 - EASME - Expected Impacts on “20-20-20” objectives

Energy Savings

[MWh /y]

Renewable Energy production

[MWh /y]

GHG Em ission Reduction

[t CO2/y]

MLEI-PDA - Interviewed 7 83.448 5 43.321,67 3 99.503

MLEI-PDA - Non interviewed 3 50.623 17 3.636,94 1 03.231

T otal 1134.072 7 16.958,61 5 02.734


In the table above, MLEI-PDA ’s contribution to sustainable energy objectives is shown. Such data are based on the applications submitted by the Beneficiaries and they are expected to be achieved when the investment

triggered by the PDA funds is in operation.

Organisational and financial innovation

MLEI-PDA presents a wide panorama of projects in energy efficiency and renewable energy involv ing municipalities, local authorities, regional councils and public bodies. Among them, several projects can be considered a model of innovation, under different v iewpoints (organisational, contractual, financial). Such innovation is a desired outcome of the selection process, which is tough and exclude business -as-usual solutions from funding, after an evaluation which involves external evaluators . In this context the role of EASME is

focussed on the moderation and enhancement of easiness of the discussion. Within this process, showcasing and “lighthouse” effects of the proposed solutions are considered and evaluated positively .

An example to be mentioned as regards innovation is the project carried out by Marche Region in Italy , since funds for technical assistance has been dedicated to new financial mechanism promoting energy efficiency investment. Within the project, the Region will develop new models for investments and tenders in order to stimulate private initiative by means of EPCs. The objective is to mobilize around 15.5 Million Euro of investment in 5 hospital buildings. EPCs will be based on energy audits, and private investments will be

integrated in a financial engineering instruments namely :

35% of investment as a grant by ERDF;

45% of investment as a contribution by the Energia e Mobilità revolving fund;

20% of investment financed by the ESCOs.

A number of interesting points can also be mentioned from the project PARIDE. In this project, the main financial resources derives from an EPC funded by private equity . The investors like ESCOs or private companies, and their own financing streams will be chosen by means of a tender. The tender procedur e foresees a unique tender divided into three lots (one for each cluster of municipalities). This innovative scheme shall lead to a minimum investment level of 16,8 M Euro and it provides a quick investment mechanism to address

the urgent need for the renovation of street lighting facilities.

19 The calculation of the leverage factor is based on the ratio between the planned investment and the EU contribution. In the tables of this evaluation it is homogenised between ELENA and MLEI-PDA. Howev er the calculation of the lev erage factor for MLEI is different from ELENA, since it is based on the project development costs and not on the EU contribution as in ELENA. Thus the lev erage ratio calculated according to the MLEI rules is 22,1 7 where the total PDS cost is € 21 .7 7 9.27 1 . 20 No data av ailable for MLEI-Unselected projects. The percentage are calculate only on the 1 0 projects v isited. 21 Solrod Biogas in Denmark.



In the second stage of interv iews eight projects have been interv iewed, finding a similar level of innovation. Where financial innovation is not the main focus of the project, innovative technological solutions are put in

place. This is the case for instance of project Bowen in the Municipality of Hengelo , that is the first case in Netherlands to adopt such a technical scheme, re -using the waste heat and compressing the jump in temperature from 7 0°C to 30°C and thereby reducing the final consumption of energy required .

EU added value

According to the interv iews outcomes, the common idea is that the role of MLEI-PDA has been essential for achiev ing project results. Based on this statement, it can be said that MLEI-PDA has been effective in helping local authorities developing energy efficiency projects and the related market at local level. Without the

intervention of MLEI-PDA, most of the projects would not have been possible. In many cases the PDA helped in achieve better results than expected without.

Most of the projects are oriented towards encouraging the development of financial mechanisms for the promotion of energy refurbishment and renewable energy. Strong collaboration among municipalities, regional Authorities, ESCOs and public agencies contributed to steer the specific projects’ objectives within the general PDA objective. MLEI-PDA has been successful in giv ing resources to build the capabilities needed to manage

this process.

Associated benefits

Quality of life is fairly impacted by all the MLEI-PDA projects. All the beneficiaries interv iewed are confident that all the taken actions will bring improvement both in the private and public sector. The projects will open up for new ideas and increases in energy planning, and this is one of the most important PDA objective. In many cases projects will contribute to the creation of new permanent and temporary jobs during the investment stage and once the project will be in operation.

3.3.3 Relevance Capacity of addressing needs, problem s and challenges

It has been said that MLEI-PDA has been built on the needs of the municipalities which subscribed the Covenant of May ors. In most part of their cases, the lack of technical capabilities hampers the implementation of the SEAPs. At the same time, the lack of management capabilities could make the project implementation much more difficult. These are the major challenges encountered by the beneficiaries. “Solrod biogas” , for

example, which is a project developed around one big investment in a biogas plant, used the Technical Assistance for project management activ ities including:

involvement of important subcontractors,

establishing the final plant lay out,

securing contracts with suppliers of raw material to the biogas plant,

devising and realising a call for tender for turnkey contractor to realise the biogas plant

project communication.

In other cases, where the awarded projects involve more interventions and partners the Technical Assistance

has helped in reinforcing the cooperation between them and fostering the integration of all serv ices in a broader package towards municipalities. For the case of “Escolimburg” , this resulted in an “integrated & global” approach which is a key success factor for the current wor k.

MLEI-PDA ensured a support in developing innovative schemes that other national facilities did not. This is particularly true in countries where local authorities face liquidity scarcity and difficulties in access to finance and, also, where the sustainable energy market is not enough mature y et. In these contexts, MLEI -PDA has

been a key factor in responding to the real needs of project promoters which initiatives would have been abandoned, if they had not received the PDA help.

Furthermore, the new models developed by the granted initiatives are stimulating the local market to move forward to new models in which ESCOs will play a key role. In this light, private investments in the energy efficiency field will also benefit from both the generated market enhancement and the new capabilities of the public Authorities in stimulating investments and in fostering sy nergies with other national or local facilities (e.g. Structural Funds).

3.3.4 Effectiveness and Efficiency Legal Fram ework



Although language barriers are still an issue, the overall framework was clear for the majority of the interviewed projects. Especially beneficiaries involved in SEAPs were aware about the requirements and information to be

provided in the application stage. In some cases, it has been necessary an external consultancy . It can be said that the use of call for proposals provides a clear framework to candidates. As well, in case of unsuccessful application, candidates are debriefed about the evaluation outcomes, so that they can un derstand why their project has been excluded. In particular they receive an evaluation summary report providing the reasons for the scores and hence success or failure in comparison to the Call requirements. When asked, EASME’s staff provides hints either to improve the project, facilitating the drafting of the proposals. All the process can be tracked.

T arget Beneficiaries

MLEI-PDA has for main target groups the many municipalities participating to the Covenant of May ors. Due to the addressed size of investments, such target groups can be further specified as small-medium size municipalities, although there are also Regions and Provinces among the MLEI -PDA’s beneficiaries.

In terms of communication, from the very beginning EACI (then EASME) hooked on the many initiatives where cities were involved (e.g. the Covenant of May ors’ meetings either in Brussels or in other European cities).

Sy stematically , seven-eight months before the call for proposals is published, EASME organises a European information day in Brussels which is followed by other initiatives at national level (National info day s) organised by the Intelligent Energy Europe national contact points, supported by EASME’s officers v isiting EU countries.

Adequacy , efficiency and effectiveness

The EASME-MLEI awarding procedure is based on a Call for Proposal scheme which is managed by the Energy unit. In the current structure, the Energy unit staff is about 38 people, div ided in 3 sectors: Buildings, district

heating and cooling; industry products and consumers; and public authorities, energy services and financing. At the time when MLEI started, the energy unit was split in two units, one focused on energy efficiency and another one on RES. So far considering the specific expertise of the staff, mostly 2 people have been working on MLEI, 1 full time and 1 half-time, plus 3 other colleagues following a few projects.

Each project is followed by one project officer, monitoring the implementation, and one financial officer (sitting in a different unit). Beside this, the evaluation process usually makes use of three external experts which are asked to evaluate each project proposal, individually and separately. These experts meet in Brussels to discuss

the proposal and agree on the scoring against award cr iteria. In this way EASME ensures that all the proposals are treated on a fair and transparent basis.

The reporting procedure is well established with progress report based on standard forms which the beneficiaries are required to deliver, including: an interim and a final reports connected with the pay ments, if approved and usually one or two additional progress reports.

In general, MLEI-PDA facility has been working efficiently, providing evident results, even looking at the level

of satisfaction of the respondents.

During the interv iew with the EASME’s staff a specific topic related to fund allocation arose. As provided by the IEE Programme, the budget allocated to MLEI -PDA, as to all other calls, is indicative and, in some cases candidates to MLEI-PDA funds are in competition with applicants to other topics. It happened that good projects have been posed in a “reserve list” rather than being awarded due to budget restrictions. Although it should be clear to IEE funds (any ) applicants that this risk is the re, in our opinion such mechanism should be rev iewed, in order to acknowledge the effort of municipalities in preparing v iable projects.



Figure 45 - Structure of the MLEI-PDA.

Some hints for improvements come from projects promoters, for example:

ACCELERATE (Spain)

The length of the evaluation process causes a high level of uncertainty

OTR (UK)

Longer delivery period

Shorter application process

More clarity and ability to set a start date

Clarity on claw back in the case of managing abortive costs where the cause is bey ond control of the project

Speed on change requests so that projects aren’t working at risk for several months at a time.

ESCOLIMBURG (Belgium)

A larger – or more tailored – communication programme could enhance the overall awareness

about the Technical Assistance.

May be it would be good to have a feedback moment during the application phase to validate if the proposal/application development is on the right track, as well as to have some inspiration from similar projects in other regions and/or countries.

It would be good to have a local European Commission presence and/or documents in the local

languages. However, it is important to note that a local presence would not mean an additional level between the local beneficiaries and the European Commission, as it was much appreciated to have a direct contact with the European Commission. The objective of this local presence would be to provide the necessary background on the local context.

From the second phase of interv iews we can mention:

ESCOSC (The Netherlands)

The outline of the project is quite innovative for the Dutch building sector, municipalities and housing companies. At the end, IEE will look, among others at the leverage factor. That means the grant is output-orientated. The process and ideas at the start of a project can change during the project. Project promoters realised that when it comes to innovative contents would not always

ensure what the output will be. For this reason a project can take longer as envisaged. It would be helpful if PDA would be more flexible in this.

The number of reports to be provide can be reduced. Once a y ear would be enough.

It would be good to have a local European Commission presence (and documents in the local

languages). However, it is important to note that a local presence would not mean an additional level between the local beneficiaries and the European Commission, as it was much appreciated to have a direct contact with the decisional area.

ENSAMB (Norway )

EASME

Call for ProposalExternal Expert

Beneficiaries

MLEI - PDA

EC

Reporting



The application procedures were not in line with the speed and understanding of the local political

processes

36 months are too short to get results in a local Municipal environment where "investment windows" opens and closes unpredictable.

Dissem ination

Projects promoters tell they have been deeply involved in dissemination and communication activ ities,

participating to dedicated conferences and meetings. When MLEI-PDA started in 2011, specific sessions were organised to introduce potential applicants to the MLEI-PDA scheme because it was new, more unusual, it demanded capacity of the cities to fill out an application form. Both the initiatives in Brussels and at national level, at that time, were useful to mobilise interest, knowledge and demand for that schem e. EASME organized EU info day s and presented the MLEI -PDA facility in the framework of national EU day s, organized a MLEI seminar in Brussels in 2012 and conducted several webinars.

An additional effort was (and still is) provided by EACI/EASME organising a two-day s meeting every y ear in

Brussels where cities’ authorities and officers can meet and exchange experiences and models to learn from each other. Such meetings have been opened to the ELENA projects, in order to enlarge the community , in the v iew of creating a European landscape, and help using public funding opportunities, sharing and developing models. Of some conferences/seminars, proceedings are published on the EASME’s website, for sharing knowledge.

Exchanges have been favoured by the inclusion of travel and subsistence expenses in the projects budget.


Long lasting im pacts

From site v isits, a picture can be taken of a successful process, also in terms of long lasting impacts as the creation of collaboration mechanisms between local institutions and private sector . This was reported as a significant benefit and it characterizes many of the projects funded by MLEI-PDA. For example, according to Energie POSIT’IF, the economic model that has been implemented the semi-public company brings significant long-lasting contribution in fostering energy efficiency as it relies on third party financing, a sustainable

financial mechanism which, in contrast to subsidies, is not subject to budgetary const raints of public institutions. This was translated into:

awareness and capability to be spent in the field of financial modelling,

independence from the financial point of v iew.

Capabilities have increased both in quantitative terms, in terms of quality. In some projects, the acquisition of new staff was accompanied by an increase in the general capabilities of the whole team. According to beneficiaries, this is translated into an internal and external benefit when these competences are used in similar contexts.

3.3.6 Coherence and Synergies No overlap has been experienced, since no comparable instruments were available. For some projects , as

Escolimburg nor ELENA neither JESSICA were in line with the needs and the structure of the investment. On the other hand MLEI-PDA showed good sy nergies with local energy efficiency funds (if any ) and with other instruments like ERDF.

It has to be highlighted that beside projects that used national funds for the investment phase, there are experiences in which national or regional schemes have been adapted in order to meet the project needs. Hereunder the finding coming from the MARTE and the ZagEE project are presented as best practices.

MART E

Within the project the Regional Authority of Marche will develop new models for investments and tenders in order to stimulate private initiative by means of EPCs (Energy Performance Contract). In these, investments will be integrated in a financial engineering instruments namely :

35% of investment as a grant by ERDF

45% of investment as a contribution by the Energia e Mobilità revolv ing fund (FEMM)

20% of investment financed by the ESCOs.



It is important to underline that the revolving fund created will be addressed also to projects developed outside the MLEI one.

ZagEE

On the basis of the Agreement between City of Zagreb and the EPEEF - The Environmental Protection and Energy Efficiency Fund of the Republic of Croatia, investments generated from the granted project will be will be co-financed up to 40%. Furthermore a part of the investment will be financed through loans from the HBOR - Croatian Bank for Reconstruction and Development.

3.4 Evaluation of EIB-ELENA

3.4.1 Brief description of EIB-ELENA’s features The first window of ELENA to be opened was EIB’s since when, in, 2009, EIB signed the contribution agreement with the EC. The specific objectives highlighted by EIB with ELENA regards the support to the local and regional authorities by means of grants to contribute to the “20 -20-20” initiative and stimulate local stakeholders, including local banks. To this aim, EIB deals with the development of the potential of local and regional authorities to accelerate their investments in the field of GHG emission reduction, energy efficiency

and renewable energy sources and facilitate the financing and overcome barriers that hinder th is ty pe of investment.

Each of these purposes is currently moving towards integrated EU wide large scale actions leading to broader utilisation of innovative technologies, processes, products, policies or practises and facilitate their market uptake. The total ELENA budget managed by EIB under the IEE has been up to € 93 Million div ided in five y ears.

The scope of EIB-ELENA is to cover big scale projects with a minimum investment of € 50 Million.

Theminimum leverage factor required in the application phase is 2022.

3.4.2 Impact/Achievements Investm ent Uptake

At the time of this evaluation EIB-ELENA counts 41 signed projects. The total amount of contribution is Euro 7 2.865.683 which should mobilise Euro 4.663.627 .7 36 of investments. In the site v isits activ ity , 16 beneficiary out of 36 have been met. In the second stage of interv iews 5 projects have been contacted. The

average size of the EIB – ELENA projects in terms of planned investments is around Euro 113.7 47 .017 .

Table 18 EIB – EU Grants

N. Prj Con t ribu t ion

(A )


(B)

%

B/A

T ot a l Bu dget

EIB- Int erviewed 2 1 € 37 .251.663,70 € 2 0.246.374,14 5 4%

€ 93.000.000 EIB- Non interviewed

2 0 € 35.614.019,50 € 0,00 -

T otal 41 € 72.865.683,20 € 20.246.374,14 -


Table 19 EIB - Impacts on Investments

A v era ge

Lev era ge


(A )

Cu rrent Inv est m ent

(B)

%

B/A

A v era ge size A verage current inv est m ent

EIB- Interviewed

7 6 ,8 4 € 2 .8 6 2 .4 4 7 .8 9 8 ,00 € 1 .123.092.980,3 5 39% € 136.307.04 2 ,7 6 € 5 3 .4 8 0.6 1 8 ,1

EIB- Non interviewed

5 0,5 8 € 1 .8 01 .1 7 9 .8 3 8 ,00 - - € 9 0.05 8 .9 9 1 ,9 0 -

T otal 64 € 4.663.627.736,00 - - € 113.747.017,95 -


In the table below the environmental impacts and Energy sav ings and Renewable production are listed.

22 For the first two y ears the minimum lev erage ratio was 25.



Table 20 EIB - Expected Impacts on “20-20-20” objectives

Energy Savings

[MWh /y ]

Renewa ble Energy

produ ct ion

[MWh /y ]

GHG Em ission Redu ct ion

[t CO2/y ]

EIB- Int erviewed 1 .2 5 4 .2 6 0 4 4 7 .000 4 4 0.1 1 3

EIB- Non interviewed 1 .6 06 .1 09 1 7 1 .5 8 0 4 3 5 .4 5 2

T otal 2.860.369 618.580 875.565



According to a number of beneficiaries’ feedbacks ELENA – EIB’s action stimulated innovation in operational and financing schemes. Among the visited projects, a large variety of approaches has been found. Collaboration among local governments was wide and deep. Some projects adopted, for example, Public Private Partnership (PPP) model like the “City of Paris” or “ZEB”. This kind of approach is considered to be challenging in local context, and often it represents a good way to undertake new investments. Fin ancial innovation is often found

in projects that involve many localized interventions. In some cases , for example, the financial models are different within the project itself. In the project “REDIBA” local councils were offered the possibility of financing through several instruments:

Credit, with a bank entity (7 -12% interest)

DIBA’s credit program (3 months Euribor + 3.75%= 5.5-6% interest). Interest were subsidised by the

Regional council

Credit Line up to 175,000 €/y at 0% interest rate

Subsidies

ESCO’s

In some others, bank guarantees represented an issue for the project development. This is the case of the project “LED PACK”. In fact both the Company LED PACK Management Namy słów (the SPV owned by the Namy słów municipality) and the municipality of Namy słów have not be able to provide a guarantee covering value of whole project which was supposed to include engagement of 33 municipalities. This is due to the strict bank regulation which is supposed to be unprepared to deal wit h energy efficiency market by means of sav ing-

guarantees and the related technological risks. Furthermore the issue of the bank guarantees affects the disbursement of grants.

In this sense the imperative need for bank guarantees reflects a strong link to the classical financial model and therefore, a poor financial innovation exacerbated when the lack of such guarantees results de facto into a brake for the full development of the project.

During the interv iew with EIB, the topic of a guarantee sy stem supporting the construction of financial

structures has been discussed and it represents a needed building block to develop more complex operations.

From the project "Provincia di Milano", the collaboration among the subjects involved is currently giv ing positive impacts to the innovation of the financial scheme. With this regards the beneficiaries considered contracts for EPC serv ices concessions, in which the awarded ESCos could use of the fund made available by the EIB and managed by Mediocredito Italiano.

About Slovenia, investments will be financed from own resources of the municipality of Ljubljana, Public Company Energetika Ljubljana and, in the future, from the public-private partnership of energy performance

contracting. In the application to ELENA, the municipality determined various ways to implement investments – in addition to public-private partnerships of energy performance contracting with ESCO, the use of cohesion funds and funds form the municipality of Ljubljana have been planned. Public -private partnerships of energy performance contracting with ESCO represents 7 9% of the planned investments, which, however – due to particularities of State Budget accounting sy stem have not y et been entered into. The threshold for planned investments that are not linked to ESCO has been exceeded by the municipality of Ljubljana. Total amount of investments realised so far is EUR 12 million. This was ac hieved through municipal investments, cohesion

funds and concession contracts.

Within the second phase Telco interviews the project SPEE Picardie for instance, summarised the several focal objectives of its first regional public office for “pre-funding” Picardie pass renovation:



to break the deadlock on the energy renovation market in private housing, in due scale and timing

regarding the energy and climate stakes;

to break free from purely banking-based rationale, in order to bring economic leeway to house holds, who cannot self-fund the works or cannot borrow;

to commit to future energy sav ings, generated by the housing thermal renovation, as a resource to

partly cover the works investment.

Through this v irtuous and independent economic model, the Region of Picardie aims at breaking with classical public intervention, for a neutral impact on public finances.

The principle of the pre-funding mechanism means, for a private owner in Picardie, to make his housing renovation works fund by a third-party, Picardie pass renovation, which will itself be reimbursed, for total or partly , by the sav ings achieved on the energy bill, thanks to this renovation, and which will contractually guarantee the housing energy performance improvement.

Picardie pass renovation grants to the public service subscribers an advance for works, for an average amount of 30 000 euros. The beneficiary reimburses this advance through a monthly repay ment, based on the after -works energy sav ings (average of 56% of sav ings on the energy bill). The advance on the energy sav ings is granted at an interest rate of 2%, applicable during 15 y ears for equipment expenses, and for 25 y ears for building isolation works.

SPEE Picardie aims to lower final energy consumption by 50 to 7 5% for the households it serves. Preliminary estimates shows the model to be effective as soon as the 40% energy efficiency threshold is reached, given that

the sav ings can go toward at least 50% of the monthly advance repay ments.

EU added value

EU added value is strongly perceived by the funded projects. Most of them believe that without the TA the project would not have been possible. This is the case of “ZEB” and , even further, “Province of Modena” where the budget constraint of municipalities discourages several investm ent opportunities. EIB-ELENA brings also EU added a value in terms of the achieved results. In fact according to the “SOMACY L” project:

the project would never have reached its current extension without the PDA;

PDA enabled deeper studies and analy sis that undoubtedly helped to approach the desired results.

Technical assistance provided by the EIB-ELENA has succeeded where the existing national or regional programmes would not be successful.

Associated benefits

According to the interviewed projects promoters quality of life will be improved. Each of the projects expect to give contribution in terms of local employ ment and in terms of developed new skills and competences. According to the interview with “Province of Modena”, the market is still far from bein g fully prepared to deal with wide diffused energy efficiency investment without public subsidies. They are sure that the project gave a consistent contribution for the market uptake of new financial and operational schemes.

3.4.3 Relevance

Capacity of addressing needs, problem s and challenges

According to the information gathered during the site v isits, EIB-ELENA has been able to meet the needs of the applicants. Where a lack of skills was a barrier to the development of the project , EIB-ELENA provided the needed resources to overcome them and, in many cases, EIB assisted the preparation and implementation of large investment programmes. For example, according to the beneficiary of the project “BRITE”, EIB-ELENA allowed to finance several activ ities necessary to implement € 14o Million of investment, namely :

Feasibility assessment, structural surveys, business planning, engineering studies;

Financial modelling, risk analysis and other preparatory works (e.g. legal) for the municipal energy company;

Procurement of service providers and overall project management ;

Business planning to establish the municipal energy company .

The project Eco.AP in Portugal, contacted in the second stage interviews, aims to promote the retrofit of public buildings, street and traffic lighting sy stems located in the Lisbon Region for improvement of the energy efficiency. The implementation of the investment Programme will help these public sector actors in meeting



their energy efficiency objectives, and to overcome some bar riers that are currently faced in the development of energy efficiency projects. The programme will contribute to mobilise relevant stakeholders from Lisbon

Region, as public bodies, banks, investors and businesses in a broader and hopefully national publi c and private use of ESCOs to improve energy efficiency . ADENE as the entity responsible for the execution of the main technical part of programme needed manpower resources to respond to the entities needs, so the PDA funds were needed to make available to public bodies the initial assistance that they may require to develop their projects. One of the major barriers to energy efficiency in the public sector is the lack of knowledge and expertise. Henceforward, PDA can overcome that barrier in order to develop energy efficiency implementations in the public sector. The lack of capabilities would have been critical to deliver the project and it would not exist

without PDA. The PDA enabled ADENE to convene an experienced taskforce capable to deliver the needs o f this project.

As a general feedback, all the interviewed projects believe that EIB-ELENA made it possible to give the project the necessary tools to the investment by increasing both technical and economic knowledge.


Some communication issues were highlighted by the beneficiaries which, at the very beginning of the application process, didn’t find all the required information to be presented in the application. After preliminary discussions, nonetheless, EIB provided clarifications and help. In some cases, knowledge sharing among project partners was useful to submit the application at no cost. This is the case of “DAFNI” where the municipalities received strong help from the project partner DEDDIE23. Otherwise, external consultancy has been used.

The main difficulty faced during the application phase for the project SOMACY L as an example, was the deep level of detail needed to elaborate the application report. In this project, more than 200 facilities were to b e analy sed, and there was very little information on them at the stage of application. It was very difficult to assess whether a given facility was going to be finally included in the project or not.

T arget Beneficiary

EIB-ELENA was the first facility to support the local authorities, in particular those participating to the Covenant of May ors. In this light EIB had an important role in sustaining the first pioneer action plans

developed inside the initiative.

Within the PDA facilities, EIB-ELENA was clearly distinguished by the scale of investment addressed and, for this reason, both from EIB-KfW and MLEI-PDA candidates with large investments programme have been redirected to EIB in order to find a suitable support. Even looking at the financial resources m obilised by this Facility , there are no doubts that it hit the target assigned. Furthermore EIB has been the referent point of large initiatives which provide ev idence of the EIB-ELENA’s effectiveness. Cases such as the Greater London Authority or the AESS-Province of Modena can be considered successful initiatives to be replicated in future.

They have been able to bundle together diversified project, acted as centre of competences for other smaller public bodies (e.g. municipalities, schools department, et c.) and they have been able to generate large refurbishment plans in private real estate.

Regarding the ty pe of granted projects EIB underlined that in the very beginning they did not have transport projects since such projects need more time to be developed.


Inside EIB the Energy Department counts around 40 professionals, including economists and engineers, spread

in three main div isions:

Security of Supply ;

Large scale RES and RDI;

EE and small scale energy projects.

Inside this, until the 31th December 2014, ELENA was regulated under the EE and small scale energy projects area, but since 2015 all the TA activ ities of the EIB have been grouped under the advisory department.

23 DEDDIE is the local distribution company (DSO)



Figure 46- Structure of the ELENA-EIB facility.

There are no calls for proposals and assistance is granted on a first -come first-served basis within the limits of the given budget. To start the discussion to seek assistance from ELENA, the following minimum infor mation should be presented to the EIB in a pre-application stage:

Brief description of the planned investment programme, including type of investments and approach for implementation of the programme;

Expected investment cost and schedule to develop the programme;

Amount, scope and main needs to be addressed by the requested technical assistance.

Based on the information provided in the pre-application stage, the EIB assess whether the proposal meets the selection criteria, and the need for technical assistance of the specific investment programme. A positive outcome of this first assessment allow for a request for assistance to be prepared and submitted to the EIB

using the application form. The Bank will then present the proposal to the European Commissi on for approval.

Every single project is followed by a responsible from the application phase to the project deploy ment.

EIB has been largely involved in helping applicants to submit their applications. Based on the interv iew with the EIB, it is possible to state that the continuous interaction with beneficiaries led to a general improvement of the applications and to the development of reliable investment programmes. In particular , it helped promoters of potentially eligible projects to better understand the real value of their projects. This explains the ratio of 100% of submitted project approved by the European Commission.

The beneficiary of the project “Provincia di Milano” , for example, reported that the funding programme was decided in accordance with EIB’s proposed timeframe and this programme met the needs of the projects.

In terms of effectiveness of the support provided, the disbursement showed some differences depending on the ty pe of beneficiaries. However, normally , disbursement are scheduled as follow:

40% of the contribution provided after the Inception report approbation (3 months after signature);

30% of the contribution provided after the Interim report approbation;

30% of the contribution provided after the Final report approbation.

Such scheme mostly met the needs of the applicant but forced beneficiaries to pre-finance part of the eligible activ ities. The mismatch between the last 30% may cause liquidity problems.

Some concerns on the duration of the application stage have been collected. Quite interesting is the opinion of

REDIBA project which reveals that the process took from nine months to one y ear, but considering it was the first case of ELENA project this time was fairly reasonable and matched with the needs of the project.

Interv iew with EIB shows that the duration of three y ears is hardly compliant with the requirements of the projects of the EIB size (> € 50 Million), which may encounter some difficulties in reaching the leverage within three y ears. This a point to be taken into account in relationship to flexibility .

EIB

Application

Beneficiaries

ELENA PDA

EC

Reporting



The stipulated contracts foresees a precise schedule of progress reports and meeting that the final beneficiaries are required to submit to EIB:

Inception report after 3 months from the date of agreement signature. After the inception reports there may be changes in the agreement. Contract with external consultants, if any , is signed.

Kick-off meeting with final beneficiaries. Even if it is not foreseen by the Contribution Agreement, it is a really useful tool.

Periodic report delivered every six months.

Final report.

Dissem ination

Where dissemination and communication activity has been carried out, they proved to be a success. Most of the project participated to conferences and webinars, e.g. the ones organised by EASME. This activ ity helped also

some tendering procedures. The case of SOMACY L reveals that communication activity ensured the success of tenders and contract signing.

Furthermore it has to be highlighted that many ELENA-EIB’s projects, thanks to their extension and v isibility , actively worked in order to promote the PDA initiative in the respective counties at the very early stage of the programme.



According to EIB, it is too early to assess the long lasting impact of the Facility, since just few projects got to the finish line in the ELENA pipeline. The interviewed beneficiaries reported that, thanks to the work carried out with EIB, their capabilities are generally improved in the field. The beneficiaries are aware that, firstly , in the project itself and, secondly, in the financed technical assistance they got strong contribution to increase in skills within the local authorities. Not alway s the improved capabilities could find possibility of being used in new

projects in the future. According to the findings of the interv iew with the “Province of Milano” financial constraints do not allow new investments if not financed with national mechanisms or European. This problem is often highlighted, when budget constraint are there as an hard barrier to be overcome.

Replicable projects

In general, projects under EIB-ELENA have generated realistic and replicable models of public-private collaboration with ESCO contracts, with success examples to show, learn, improve and replicate. Replicability is widely felt from beneficiaries. Two cases from the site visits activity are quite interesting. The first is “REDIBA”

and the second is “Provincia di Milano”.

The REDIBA project, they say in the interview, placed energy efficiency on the political agenda and it has long demonstrated its huge potential of replication. Its success has showed that energy efficiency is also an instrument against the economic crisis and several Mayors are prioritizing energy efficiency investments over other initiatives because they can generate important energy and economical sav ings.

In Milan, the project acted as a cataly st for many other actors who requested and obtained support from ELENA fund. EIB was alway s available for cooperating with local authorities and willing to share results and

documents based on experience.

A case from the Picardie project contacted in the second stage of interv iews should also be mentioned. The Technical assistance in fact allowed to cover the salary costs of the internal team of Picardie Regional Board of Public Serv ice Energy Efficiency. ELENA allowed to quickly hire a responsible financing and markets, territorial marketing and communication manager, three technicians and a technical manager. These recruitments have allowed the board to be quickly operational to test its schema. However their conviction is that this project

would not have replicability potential, because the technical assistance is the only mechanism that allowed to cover the salary cost of the internal team. If a region embarked on an innovative experimental design for which there is no market y et, it is essential that governments fund all or part of the costs of the structure.

3.4.6 Coherence and Synergies EIB-ELENA did not create overlaps with other instruments both at national and European level. In some cases, like “ZEB” in Netherlands the beneficiary told there were no existing regional and national programmes fulfilling the same purpose of bringing projects to maturity . Good sy nergies in some cases emerged. The EOL

project, for example, used resources from the Cohesion funds and the municipality of Ljubljana is currently thinking to perform other investment using Jessica and Jasper.



3.5 Evaluation of KfW-ELENA

3.5.1 Brief description of KfW-ELENA’s features KfW is a German bank owned by the Federal Republic (80%) and Federal States (20%) that operates in Germany and in Europe. Its main functions are twofold:

Dom estic promotion of SMEs and local business in Germany such as housing construction

refurbishment and national infrastructure;

Support internalisation and development with international projects and promoting the development of transition countries.

KfW has significant experiences of collaboration with European Institutions and commercial banks in the implementation of international programmes, promotional loans and Technical Assistance. Since 2011 , it received the mandate for ELENA PDA , entering in the Contribution Agreement with EU. Differently from the

other MEs, KfW operates by means of Partner Financial Intermediaries (PFIs) which represents the counterpart for the allocation of the ELENA annual budget. The Art.4 of the contribution agreement specifies that KfW shall select the Investment programmes of PFIs to be supported under the PDA facility. Furthermore, ELENA is combined with a global loan model. This means that PFIs shall demonstrate that their investment programmes can be eligible also under the PDA requirements.

As a whole KfW has signed agreements with 6 PFIs, but only three have so far effectively delivered grants to the final beneficiaries24:

BPCE (Groupe des Banques Populaires et des Caisses d'Epargne) – Paris, FR;

ERSTE Bank - Vienna, AT;

KommuneKredit - Copenhagen, DK.

Table 21 KfW - ELENA and global loans allocation to PFIs

2011 ELENA KfW budget

allocation PFIs

KfW global loans

EU budget committed to

PFIs


Final Beneficiaries

8.000.000 €

BPCE 1 00.000.000 € 2.985.000 € 1 .888.857 €

Deutsche Bank 48.600.000 € 2.430.000 € -

Erste Bank 48.600.000 € 2.430.000 € 2.198.628 €

Total 197.200.000 € 7.845.000 € 4.087 .485 €


allocation

PFIs KfW global loans


PFIs


Final Beneficiaries

8.000.000 € KommuneKredit 48.000.000 € 3.800.000 € 2 .092.7 98,00 €

Bank Handlowy 40.000.000 € 2.000.000 € -

CDP 40.050.000 € 2.003.000 € -

Total 128.050.000 € 7.803.000 € 2.092.798,00 €


allocation

PFIs KfW global loans


PFIs


Final Beneficiaries

8.000.000 € - - - -

24 KfW allocated budget also to Deutsche Bank (Frankfurt, DE), Cassa Depositi e Prestiti (CDP, Rome, IT) and Bank Handlowy (Warsaw, PL), but no projects hav e been financed so far .



Source: KfW

3.5.2 Impact/Achievements Investm ent uptake

Eleven out of 30 projects have been interviewed during the site v isits activity and beyond. The EU has allocated € 24 Million to KfW-ELENA facility over three y ears. So far KfW has signed agreements with 6 PFIs representing € 15,6 Million of possible ELENA grants and an expected amount of investment of € 148 Million. At the time of this evaluation, the active PFIs was only able to commit € 6,2 Million of ELENA grants to final

beneficiaries, with a disbursement rate of around 8%, and to approve € 3,2 Million of KfW global loan out of € 325 Million which have been allocated to them.

Table 22 KfW - Impacts on EU Contribution

N. of Prj.

Total contribution (A)

Disbursed Contribution

(B)

% B/A

Total Budget

KfW-Interviewed 11

€ 24.000.000

BPCE 3 € 1 .121.517,00 € 1 47.000,00 1 3% ERSTE 7 € 690.450,00 € 221.000,00 32%

KommuneKredit 1 € 990.000,00 € 1 30.000,00 1 3%

KfW –Non interviewed 19 - - BPCE 1 € 7 67.340,00 - -

ERSTE 1 7 € 1 .508.178,00 - -

KommuneKredit 1 € 1 .102.798,00 - -

Total 30 € 6.180.283,00 € 498.000,00 8%

BPCE 4 € 1 .888.857,00 € 1 47.000,00 8%

ERSTE 24 € 2.198.628,00 € 221.000,00 1 0%

KommuneKredit 2 € 2.092.798,00 € 1 30.000,00 6%


Table 23 KfW - Impacts on Investments

Average Leverage

Planned Investments

(A)

Current investments25

(B)

% B/A

Average size Average current

investment

KfW-Interviewed

BPCE 58,14 € 65.206.000 € 7 .899.000 1 2% € 21.735.333 € 2.633.000,00

ERSTE 21 ,41 € 1 4.784.000 € 4.883.000 33% € 2.112.000 € 697.571,43

KommuneKredit 20,51 € 20.300.000 € 1 .700.000 8% € 20.300.000 € 1 .700.000

KfW –Non interviewed

- - -

BPCE 31 ,28 € 24.000.000 - - € 24.000.000 -

ERSTE 23,00 € 34.687.800 - - € 2.040.458 -

KommuneKredit 20 € 22.055.953 € 22.055.953

Total 29,29 € 181.033.753 € 13.652.000 8% € 6.034.458,43 -

BPCE 47 ,23 € 89.206.000,00 - - € 22.31 5.000 -

ERSTE 22,50 € 49.471.800,00 - - € 3.861 .260 -

KommuneKredit 20,24 € 42.355.953,00 - - € 20.300.000 -

25 Triggered Investments data have been collected during the interviews thus they are not available for non v isited projects




Table 24 - Global loans delivered.

PFI Signing date

Global

Loan [M€]

Num ber of sub-loans approved

Volume of approved sub loans

[M€]

Num ber of sub-loans disbursed

Volume of disbursed sub loans

[M€]

BPCE 26/10/12 100 323 1 ,76 321 1 ,64

ERSTE Bank 13/11/13 49 2 1 ,45 2 1 ,15

KommuneKredit 27 /05/14 48 - - - -

T otal 325 325 3,21 323 2,7 9

Source: KfW

The low disbursed contribution and current investments levels show the slow implementation pace of the KfW facility work. Despite the facility has been established in the 2011, it has taken much time to start properly. This is due to the long chain that KfW has activated in order to reach the final beneficiaries. Anyway , it is opinion of the evaluator that, thanks to the communication work carried out by KfW among current PFIs, ELENA KfW will be able to reach more and more importance. This is also in the light of the increasing importance that financial

institutions are giv ing for energy efficiency investments.

Based on the expectations listed in the application forms, these projects will a have the following impacts in terms of energy sav ings, renewable energy production and GHG emission.

Table 25 Expected Impacts on “20-20-20” objectives

Energy Savings [MWh /y]

Renewable Energy production [MWh /y]

GHG Em ission Reduction [t CO2/y]

KfW

BPCE 19.777 1 .500 35.943

ERSTE 11 .098,8 7 .108,7 174,96

KommuneKredit 10.900 - 6.7 50

T otal 41.7 7 5,8 8.608,7 42.867 ,96



As revealed by the interv iews conducted to projects promoters, not all the projects reserve a particular innovative organisational and financing scheme. Projects involving refurbishment of schools , for example, are based on simple loans and own private finance. This outcome is mostly due to the specific target KfW-ELENA aims to target. Local contexts are affected by a strong lack of knowledge of particular financial mechanism and unspecialised local authorities which cannot build more complex schemes (e.g. EPC schemes or larger

programme involv ing private owners) without the intervention and participation of a regional / provincial authority or investing in external consultancy .

Nonetheless, in some cases, like the French projects, initiatives envisaged more than one intervention and leveraged on the collaboration of several subjects such as Energy Agencies, General Council and Regional Authorities. Such bodies seem to be more prepared to accept the project development challenge and to produce good results. It is ev ident from the site v isit activity that such type of entities has developed the most innovative

projects among the ELENA-KfW initiative.

EU added value

Given the capillary structure of KfW ELENA, EU funds have been used for very small indiv idual projects. Despite they are not boasting strong innovative financial elements, in the v iewpoint of the beneficiaries these



projects have brought appreciable local value. A largely common opinion reveals that “ELENA is tailor made for communal projects”.

Despite that supporting small-scale projects not going beyond business-as-usual is questionable in terms of EU added value, most of the KfW-ELENA beneficiaries felt a certain EU added value and especially by those which managed municipal investments. On the other hand, ELENA grant contributed in refining the quality of studies and analy ses conducted and it improved the breadth of the results but has not been a real key factor even for smaller scale projects. This emerges from the interv iew conducted with "Vir´Volt-Ma-Maison programme" which is a project carried out by a promoter with a pr e-existing dedicated structure for energy efficiency investments.

On the basis of the interv iew with Franche -Comté Sustainable Building Plan for example, the ELENA's EU added value is perceived in terms of the contribution for the establishment of a partnership with a financial institution for the development of financial tools and mechanisms dedicated to the funding of low -energy refurbishment projects.

Under the v iewpoint of PFIs it has to be highlighted that, in countries in which there is a high quality finance, the participation of PFI is hampered by the price differential between the cost of funds on the KfW-funding (v ia

loan agreement) and the alternative cost of funding that the PFI can obtain direc tly in the capital markets.

In the v iew of the evaluator, taking into account the purpose of the IEE II programme, the PFI model may bring an effective EU added value to the local sustainable energy market by :

acting on similar projects across different territories in single investment plans;

establishing cooperative mechanism with PAs interested to develop large investment plans going beyond

the business-as-usual paradigm.

From the analy sis carried so far, it clearly emerges that those two points have been only partially addressed by the engaged PFI. With regards to the first point, it has to be said that so far the PFI model has not been able to act as projects aggregator itself capable to develop large scale investment programme. While the BPCE facility created bundles of projects by addressing aggregator PAs, the ERSTE Bank facility granted single -stand alone projects. As for the second point, only the BPCE experience effectively set up collaborative mechanism capable

to develop projects going bey ond business as usual leveraging on the sy nergies among Public Bodies and Financial Institutes.

The second stage of interv iews confirmed these findings once contacted two of the Austrian projects (Traismauer and Pay erbach) and one project from BPCE in the municipa lity of Pay s Voirronais.

Associated benefits

Projects experienced several additional benefits , other than Co2 reduction and energy sav ings, that can be positive to increase the quality of life especially in the local context. For example, the renovation o f 29,000

street lighting points in Aarhus has been essential to improve the traffic safety of many kilometres of urban streets. In terms of jobs creation, no specific number emerged by the interv iews but both municipalities and regional authorities foresee that projects would be able to create jobs during and after the investment. In line with the innovative scheme adopted by the French projects “Vir´Volt -Ma-Maison” and “Franche-Comté Sustainable Building Plan” the additional benefits can be measured on a hi gher level. The improvement of capabilities and expertise in the field of low-energy refurbishment is considered an asset to be used in the future. Where the message of the importance of actions to promote energy efficiency is more successful, it is

likely an increase of demand for low-energy housing renovation and thus jobs creation. Thus, the associated benefits in this case is not the direct job creation but the potential jobs created by a new aware market with increased competences.

It is opinion of the evaluator that the most valuable benefit of the ELENA -KfW arose in those project where a strong sy nergy among Public Authorities and Financial I nstitutes has been established. The case of the municipality of Pay s Voirronais and the Banque Populaire des Alpes is exemplary . This has led to increased

capacity in both bodies, to the creation of dedicated department capable to effectively speed up the sustainable energy local market also outside the ELENA initiative.


In some of the schemes the role of KfW-ELENA has been essential since missing competences have been

introduced in the organisation of the projects. In addition, in some cases KfW-ELENA was very attractive in getting financial support in a very early stage for carrying out feasibility studies. For example , in the project of



“District Heating Wörgl” , no specialised internal employees were available to perform a profitability analy sis, the preliminary study and the management of a tender procedure. Thus , they decided to stay focused on their

main field of activ ity, while the project was conducted with external specialists beside the normal day -to-day business. In projects of larger size TA has been used also for several activ ities like:

The implementation of an IT tool to track and monitor the projects;

The provision of training session on financial engineering to regional players;

The management of the Energy Savings Certificate (CEE);

The development and implementation of a communication plan, by target;

The verification of the energy performance of buildings at the end of the renovation works .

In order to have a full-understanding of the activities granted through ELENA -KfW, hereafter detailed are given per each project.



Table 26 - KfW projects funded activities.

Benef. TOTAL

ELIGIBLE

COSTS

Feasibility and market

studies

Tech.

design

Business

plan and

financing scheme

Energ

audits

Preparation of

tendering procedures ad

contractual

arrangement

Financial

Engineering

Stakeholder

and

community mobilisation

Direct staff

costs

Other "Other" description

Regi on Lor r ai ne € 852.600 € 65.000

€ 280.000 € 57 .600 €

450.000

Dev elopment of an IT structure for

moni toring and management of energy ef f iciency improvement projects (€90.000)

Dev elopment of an electronic "real-time"

ther mal monitoring system (€360.000)

Pay s Voi r onnai s € 130.308

€ 42.603

€ 87 .7 05 Technical, admi nistrative and f inancial suppor t to common hold properties and

moni toring of projects

Regi on Br etagne € 253.000 € 85.000

€ 64.000 €

1 04.000

Set-up and mai ntenance of a dedicated IT

pl atform (€1 6.000)

Moni tor ing and assessment of the operation

(€88.000)

Regi on Fr anche Comté

€ 893.600 € 300.000

€ 1 7 0.000 €

1 68.600 €

255.000

Management of Energy Saving Certificates

(€1 00.000)

Cr eation of a Database tool (€20.000)

Ex -post moni toring of projects (€1 35.000)

Muni ci pal i ty of

Aar hus

€

1.100.000

€

650.000 € 1 88.000

€

262.000

Immobi lien Baden € 200.700

€ 1 7 5.000

€ 25.7 00

Ver anstal tungs- Laa an der Thay a

€ 32.160

€ 1 7 .890

€ 1 4.27 0

Muni ci pal i ty of

Paudor f € 98.000

€ 98.000

Stadtw erke W oergl € 568.045 € 30.600 €

27 0.000 € 1 30.000

€ 1 37 .445

Tr ai smauer

Kommunal entwickl ungs

€ 48.500

€ 31 .500

€ 1 7 .000

Hauptshulverband Janbach

Immobi l i en

€ 10.000 € 5.000

€ 5.000

Muni ci pal i ty of

Tul l n an der Donau

€ 69.500

€ 69.500

Muni ci pal i ty of Schar nstei n

€ 351.190 € 1 25.000 € 1 25.000

€ 50.000 € 51 .1 90

Muni cipality of St. € 23.800

€ € 1 0.000

€ 3.800



Benef.

TOTAL

ELIGIBLE COSTS

Feasibility

and market studies

Tech.

design

Business plan and

financing

scheme

Energ

audits

Preparation of

tendering

procedures ad contractual

arrangement

Financial

Engineering

Stakeholder and

community

mobilisation

Direct

staff costs

Other "Other" description

Andr a i m Lavantal 1 0.000

Tr ai smauer

Kommunal entwickl ungs

€ 104.569

€ 60.000

€ 1 9.000 € 25.569

Schef fau Gemeni ndeverban

d

€ 210.000

€

21 0.000

EGEM Schar nstein € 190.436

€ 62.850

€

26.07 0 € 39.000 € 51 .1 90 € 1 1 .326

N on el igible costs (basing on the description

r epor ted on the Application document)

Mar k tgemei nde Pay er bach

€ 43.883

€ 39.450

€ 4.433



It arose that, contrariwise to what happen in the other experiences, projects developed in Austria rarely have been granted to carry out activities that have gone beyond the business -as usual- activities both under the

technical and the financial-legal point of v iew.


From the site v isits activity, difficulties in comply ing with the application rules have been experienced , when approaching the Facilities. Applicants were helped, then, by the banks or by external consultants. Many

applications were reviewed internally by the PFIs and KfW in order to have access to the project pipeline. The ELENA message aimed at stimulating the enhancement of capacities as an instrument of market stimulation, was difficult to be delivered and KfW provided significant efforts to push it . For example, the communication activ ity carried out by KfW has been successful in the French case, where beneficiaries were able to provide all the required information.

It must be highlighted that two different kind of approaches have been developed. In the BPCE one, local banks and final beneficiaries collaborate from the very beginning of the application procedure. Furthermore,

application documents are translated only at the end of the procedure and this is a valuable point in overcoming language barriers. Some projects beneficiary from Austria suffered from a difficult cooperation with the managing entity and some of them had to make use of external consultants in order to develop eligible applications since their small structure did not have enough competences to fill out the application form . The very simplified form of application document has not been sufficient in many cases. In this light, it has to be underlined that the preparation of a PDA application may be a challeng ing procedure that foresees the

collaboration of different department (e.g. technical, legal and European Policy etc.) among the same public authority .

The beneficiary of the project "Elementary school of VS Baden Weikersdorf" told the language barriers contributed to make the overall framework more unclear and complex to be managed. In this sense, the suggestion is that the PFIs and the banks could simplify the application procedures .

The communication activity carried out by KfW has been successful in the French case where beneficiaries were able to provide all the required information. The administrative and technical structure of the Région Bretagne

was capable to produce all the requested information.

On the legal framework (but not only related to KfW-ELENA), suggestions arising from the interv iewees show some confusion on the role PDA wants to play . Someone suggested, in fact, to add an eligibility criterion allowing project already in the design phase to enter into the approval process, being funded only in case of full compliance. In that way , project development can be accelerated, solving the problem of the long time needed to get to the approval. It’s clear that if, on one hand, this could help the beneficiaries, on the other the added value of the PDA would be lost, as the project would be delivered in any case with own finance. In addition, it

would imply issues related to retro -finance.

It seems useful to highlight, in any case, that the application process to access grants for the PDA is felt as being very competitive.

T arget Beneficiaries

A breakdown of investments in clusters shows that most projects are small26. Although comply ing with the mission assigned to KfW-ELENA when aggregated at the level of PFIs, it raises questions as regards the PDA transaction costs.

Table 27 KfW - Analysis per cluster of investment

Clu ster N. Prj

€ 2 00,000 - € 4,999,999 2 0

€ 5 ,000,000 - € 9,799,999 4

€ 9 ,800,000 - € 14,599,999 2

€ 19,400,000 - € 24,199,999 3

€ 57,800,000 - € 60,000,000 1

26 The minimum level of investment is € 6 Million but the aggregation made by the PFIs is perfectly compliant with the ELENA Requirements.



Clu ster N. Prj

T otal 30



The ELENA-KfW facility has been developed under a PFI model. In analy sing this, two levels have to be considered:

A first one in which KfW engage and deal with Participating Financial Institutes on th e base of a delivered Investment Programme. In this light, the PFI is the only responsible for the respect of the minimum leverage factor.

A second one in which the PFI engage and deal with final beneficiaries. In this phase, two of the three

PFIs make use of local banks. It is important to underline that also in this second level KfW ensured a prompt and effective help directly to final beneficiaries committed in preparing application documents.

As shown in Table 28, KfW signed agreement with 6 PFIs. Each of these has also been granted with a global loans. Any way, until now only three PFIs has effectively delivered grants to final beneficiaries as shown in the prev ious paragraphs. Since the three PFIs act following different approaches, hereunder a description is given

for each one (Table 28).

Table 28- Relation between KfW and PFIs.

PFI Signing date

Bu dget year ELENA grant a warded to

PFIs

[M€]

ELENA grant a warded to

beneficiaries

[M€]

Grant disbursed

[€]

Loa n a warded

[M€]

Loa n disbursed

[M€]

BPCE 2 6 /1 0/2 01 2 2 01 1 2 ,9 8 1 ,89 5 9.808 1 00 1 ,64

Deu tsche Bank 1 0/1 0/2 01 3 2 01 1 2 ,4 3 - - 4 8,60 -

Er ste Bank 1 3 /1 1 /2 01 3 2 01 1 2 ,4 3 2 ,2 2 21.000 4 8,60 1 ,15

Su b. Total 2011

2011 7,84 3,76 280.808 197,20

2,79

KommuneKredit

2 7 /05 /2 01 4 2 01 2 3 ,8 0 2 ,01 6 8.925 4 8,00

-

Ba nk Handlowy

1 9 /1 2 /2 01 4 2 01 2 2 ,00 - - 4 0,00

-

CDP 1 9 /1 2 /2 01 4 2 01 2 2 ,00 - - 4 0,05 -

Su b. T ot a l 2012

2012 7,80 2,01 68.985

197,20 -

T otal 15,64 5,77 349.733 325 2,79



Figure 47 - Structure of the ELENA-KfW facility.

KfW

Application

Beneficiaries

ERSTE Bank

Investment Programmes

KommuneKredit BPCE

ELENA+

Global Loan(C1)

Agreement

Banque Populaire des Alpes

Caisse d'Epargne Bourgogne

Franche-Comté

Caisse d'Epargne Bretagne Pays de

Loire

Application

Beneficiaries

Sub-banks

Application

Beneficiaries

ELENA+

Loans(C2)

ELENA+

Loans(C2)

ELENA+

Loans(C2)

Agreement

External Expert

ELENA + Loans(C2)

PFIs

Su

b-b

an

ks

EC

Single ProjectApprobation procedure

(PA2)

Inv. Program.Approbation procedure

(IP1)

Projectapprobation procedure

(PA1)

Banque Populaire Lorraine

Champagne

Reporting from Beneficiaries and Sub Banks

(R1)

Reporting from PFIs to KfW(R2)

Reporting from kfW to EC(R3)

Projectapprobation procedure

(PA3)



Figure 47 depicts the overall structure of the ELENA -KfW facility . Hereafter the main features are pointed out with special attention to:

The agreements governing the relation along the whole chain;

The approbation procedure of Investment Programmes and Project proposals;

The grant disbursement procedures;

The reporting procedures.

Agreem ent structure The relations between KfW and PFIs are ruled by Loan/Funding Agreement based on the same sample contracts. The contents of the clauses regarding ELENA are based on the Contribution Agreement between European Commission and KfW (Figure 47 reference: C1).

In turn PFIs conclude agreements (either v ia Local Banks or not) with the final beneficiaries (Figure 47 reference: C1). Since the PFIs use their own loan agreements the evaluator is not in a position to provide the detailed structure of such agreements. Approval procedure of Investm ent Program m es After having received an eligible Investment Programme, a request for approval to be sent to the European

Commission is prepared by KfW in collaboration with PFIs. These requests include information about the Project Development Services to be financed by the Facility , the Partner ing Financial Intermediary (PFI) and the Investment Programme. The proposed investment programmes for the different PFIs has to be approved by European Commission (Figure 47 reference: IP1). Approval procedure of single Projects In collaboration with Local banks, project beneficiaries write the project application by filling a common

simplified template which require information regarding: the applicant, the beneficiary, the investment project and the Project Development Services. In this first stage Local banks – if any – adv ise the final beneficiaries and assess eligibility (Figure 47 reference: PA1). The application is then delivered to PFIs and in turn to KfW for a more deep assessment (Figure 47 reference: PA2). If the project is positively evaluated, KfW issues a Request for Approval to the European Commission (Figure 47 reference: PA3). According to the Contribution Agreement the EU Commission has a right of rejection within 5 day s.

Grant disbursem ent procedures PFI submit a request for disbursement of EU grants several times a y ear when costs for external consultants or internal experts has been incurred by project beneficiaries. KfW disburse the ELENA -grants on the basis of invoices, consulting contracts and ev idence for direct cost staff. As laid down in the agreements with the PFIs it

is possible to disburse the ELENA grants to the PFI, Local bank or final beneficiary ( Figure 47 reference: C1 and C2). Reporting Process Through local Banks, PFIs periodically collect from beneficiaries progress report depicting detailed data on the funded projects status (Figure 47 reference: R1).

PFI, in turn, provide KfW with an Excel based reporting format annually . They report about detaile d information on the Borrower, on lending Banks and Final Borrower, information on the Final Beneficiary of the ELENA grant, general project information, project information regarding energy sav ings and redu ctions and use of the EU funds (Figure 47 reference: R2). Basing on such documents, annually KfW prepares a progress report and includes the information pro vided by the PFIs in a single document delivered to the European Commission. Furthermore KfW provide the European

Commission with audited Financial Reports about the Trust Account as required by th e Contribution Agreement (Figure 47 reference: R3). Since some discrepancies are in place between the modus operandi of the three PFIs analy sed, in the following paragraphs the main features of each facility are presented.



Kom m uneKredit

KommuneKredit directly interact with the beneficiary without making use of local banks or sub -branches. It has to be considered that in Denmark is in force an Executive Order issued by central government that permits

municipalities to finance only specified investment purposes and not running costs. All other not specified investments or costs have to be financed by tax collections. In this light , and considering the challenging Danish sustainability goals, ELENA is considered by KommuneKredit as an effective tool covering an existing gap in the investment preparation phase. Furthermore the Executive Order has designated KommuneKredit as the only body authorized to grant loans to municipalities. Under this rule, municipalities shall finance their investment costs as they arise and within each fiscal y ear. This is an issue which has been discussed with KfW from the beginning and which has been by -passed by singing more than one loans with the final beneficiary .

The communication activity is made through the KommuneKredit newsletter and through the bank web -site. Furthermore they already have done common meeting with some municipalities and disseminat ion activ ities will be launched in future when appropriate.

Regarding the project assessment procedure, KommuneKredit stated that, since it has been facilitated by the deep capacity of the municipality and by the strict control from the Central Government. Furthermore during the interv iew it has been highlighted that KfW ensured a proactive cooperation during the whole process.

The activ ities granted within the only one awarded project foresee technical advice (energy audits, design and advise of new street light, assistance to the procurement process, monitoring activ ities) and legal advice (assistance in the tendering procedures).

The monitoring activ ity is performed through a report that the beneficiary is requested to deliver y early . Furthermore a final evaluation will be carried out in accordance with KfW.

BPCE

BPCE has been interested in investing in energy efficiency for 15 y ears. In its experience, BPCE found that the problem is not only related to the lack of finance of local authorities, but also to the capacity of local authorities and banks to set up a bankable local market of energy efficiency both on the technical and on the financial side. This led to serious difficulties in preparing tender documentation for new financing schemes. Furthermore , it has to be highlighted that French regions have not the legislative competence in the energy field. Therefore municipalities without energy agency often do not have intermediate bodies which can help them facing new

projects. In this light BPCE set up a mechanism in which the cooperation between financial institutes and public authorities at the local level is an enabling factor for successful initiatives in energy efficiency investments. Such cooperation starts at the very beginning of the application phase and bring to a constructive discussion to shape the project. Local banks and local authorities work together to fulfil the ELENA requirements and to wri te an application compliant with its requirements to be submitted to BPCE. During this phase, local banks assess the

bankability of the investments using their own procedures. At this stage documents are written in French and this is a very appreciated advantage. At the end of the process BPCE rev iew the documents and after approval presents to KfW an English copy of the application. With the KfW consensus, an official request for approval is sent to the European Commission.

At now the local banks that collaborates with BPCE are:

Caisse d'Epargne Bretagne Pay s de Loire;

Caisse d'Epargne Bourgogne Franche-Comté;

Banque Populaire des Alpes;

Banque Populaire Lorraine Champagne;

Banque Populaire de l’Ouest.

BPCE is currently working in order to enlarge as much as possible the network of local banks involv ing other French regions. In this light BPCE is committed to industrialize and make more clear and efficient the whole application and dissemination process. This will not only attract new ELENA applicants but a lso will give the opportunity to establish an effective media for the dissemination of achieved results among financial institutes and in turn among local authorities. Indeed, the new operational schemes set up in the ELENA projects, as the

one established within the Pay s Voironnais experience, will be easily replicable in further initiatives.



Regarding the innovative contents of the BPCE experience it is important to underline that in their v ision the real innovation is to bind together the technical and the financial capacity with a real simple scheme in which

investments have to be simple and transparent. In this light , loans are the best solution because of its simplicity and wide diffusion. It is important to note that the BPCE projects have been submitted by regional, or bundle of municipalities and this allowed to effectively develop innovative operational schemes inside the initiatives.

The activ ities that BPCE granted, in most cases were aimed to support the project promoters to establish, communicate, manage and monitor the new schemes. In this it has to be consider that all the funded project are addressing private house-owners.

BPCE Established a two level reporting mechanism: the first one from beneficiary to local banks and BPCE and

a second one in turn from BPCE to KfW. A final evaluation on project is foreseen focused on energy efficiency results. BPCE is actually committed to enhance an online reporting procedure. This will make th e monitoring procedure more effective and time respondent.

ERST E Bank

Similarly to what described for BPCE, the facility set up by ERSTE Bank relies on a close cooperation among

local authorities and financial institutions. Furthermore, the facility relied on the collaboration of a technical

advisor selected by ERSTE Bank (Energy Changes) that assisted both the municipalities in writing the

application and the financial institutions in assessing project proposals. This aspect is of valuable importance

considering that ERSTE Bank mostly dealt with very small municipalities. Anyway , it is important to underlay

that it is difficult for project of small extent to develop very innovative operational or financial schemes. This is

due to many factors as, for example, the impossibility to have a bundle of projects of sufficient extent to

establish Public-Private-Partnership or other innovative financial schemes. In this light it must be highlighted

that, contrariwise to what happen in the other experiences, projects developed under this facility rarely have

been granted to carry out activ ities that have gone bey ond the business -as usual- activ ities both under the

technical and the financial-legal point of v iew.

Through the site v isit activ ities and interv iews, final beneficiaries were requested to provide a satisfaction judgement on the KfW facility. Even if beneficiaries found really helpful the support provided directly by the KfW managers, they complained about a non-clear application process. According to the ev idences from the

interv iews, the disadvantage is that the applicant must wait for the official approval, before next steps can be taken. Long waiting times could bring the project two ty pes of difficulties:

Financial structure could change;

Especially in the municipalities, it could change the political commitment, the address and management of public resources and therefore the interest in pursuing the project.

According to the interviewees by “Franche -Comté Sustainable Building Plan” , the PFIs should also be better informed on the programme and play a more effective role in coordinating it nation -wide.

Some points have been stressed by the beneficiary of “Franche -Comté Sustainable Building Plan” project and ideas proposed, like the introduction of a “funding agency ” or a “grants agency ”. This kind of agency could introduce and promote subsidy -schemes and grants to the municipalities. On the other hand, this kind of agency could support municipalities in the case they have a new proje ct idea, in order to find out if there are any

grants/subsidies which are available/ appropriate to support this new project.

Dissem ination

Dissemination activity has been widely conducted by the KfW and by beneficiaries, in particular during specific conferences, webinar and workshops. An interesting opinion is the one coming from the Laa an der Thay a project. In this case, dissemination has been used as a strong tool to get the needed involvement of the local population for raising the citizen financing and increasing the acceptance in the population. The use of communication, therefore, was not limited to advertise the achieved or potential benefits, but it can support the

same project success.

Another important point to be stressed is the v isibility of t he projects. In the case of Vir´Volt-Ma-Maison, according to the interv iewed, the fact that the Région Bretagne was granted from the European Commission through KfW-ELENA lent significant credibility to the project and made it more attractive to the ey es o f actors involved in the field of energy efficiency .





Leveraging on examples, the beneficiary of “Franche-Comté Sustainable Building Plan” believes that this project has developed, in partnership with the Caisse d’Epargne Bourgogne Franche-Comté, an innovative financial collaboration and organisational mechanism aimed at financing low-energy refurbishment projects which could be used by other financial institutions and eventually accelerate the development of ener gy efficiency projects across the region. However, when looking at the projects supported under other KfW-ELENA schemes, the long lasting impacts of these activities is not convincing, especially in single small -scale projects.

The creation of opportunities to engage a dialogue with financial institutions on the different way s to fund low -energy refurbishment projects is the major long lasting impact emerged from KfW projects.

The effects on capacities are positive, but different among projects. For exampl e, small projects underline that despite capacities have been improved, limited financial resources still exist. This means that in a local context the lack of financial resources affects more than just the lack of skills. However, this potential for long lasting impacts will require further investigation once more experience and results are available.

Replicable projects

It is found that projects promoters intend to replicate the model adopted during the investment but without eliminating the presence of technical assistance or a general contribution by the European Commission. This once again shows how the acquisition of skills is not enough to carry out a project without the contribution of external financial resources.

Relevant is the experience of the BPCE facility in which local banks are committed to replicate the developed models. In particular the Banque Populaire des Alpes intend to replicate the Pay s Voironnais project in other

municipalities and furthermore is willing to extent the model to the Small Medium Enterprises. In this sense, the opportunity for the ELENA facilities to rely on the capacity of financial institutes to foster the project replication should not be underrated.

3.5.6 Coherence and Synergies Elena KfW is actually the complement of ELENA EIB, and no competition has been experienced between them. Its scope of activ ity is concentrated where this ty pe of funds could really serve. It is a proof of the fact that Germany does not count any projects despite KfW is strongly rooted in the terri tory. In Germany , there was no

real space for ELENA and as a natural consequence, no municipalities asked for it. Financed projects reveal that no similar instruments were available and KfW-ELENA, according to its beneficiaries, was the only facility providing Technical Assistance.

3.6 Evaluation of CEB-ELENA

In assessing the CEB-ELENA facility , it has to be underlined that, beside the public documents delivered to the EC, the evaluator has only few interv iews over which to base the assessment. In fact, the facility has so far

granted only three initiatives and the few number of project does not allow a similar evaluation of the initiative as the one performed for the other facilities. Furthermore , the projects are in a very early stage.

3.6.1 Brief description of CEB-ELENA’s features Among the public banks involved in the ELENA facility , the CEB had a social mandate. Its mission is to fund social projects for vulnerable populations. The CEB contributes to the implementation of socially oriented investment projects through four sectorial lines of action, namely :

strengthening social integration

managing the environment

supporting public infrastructure with a social vocation

supporting micro-, small and medium-sized enterprises (MSMEs).

In this context, it aims at allev iating energy poverty by supporting Energy efficiency and Renewable Energy projects targeting disadvantaged regions or populations. It participates in financing social projects, responds to emergency situations and contributes to improving the liv ing conditions of the most disadvantaged population groups. Under ELENA, it addresses public authorities and public bodies among member countries of CEB and



of IEE II Programme, encouraging the combination of ELENA with its loan for investment . CEB received two contributions:

2011 budget: EUR 3 million, but no projects have been approved, and funds returned to EU;

2012 budget: EUR 2 million.


Under ELENA, CEB signed three grant agreements. Data on disbursed contribution and triggered investments are available only for the three projects met during the site v isits activ ity 27 and phone interv iews.

Table 29 CEB - Contributions

N. Prj Con t ribu t ion

(A )


(B)

%

B/A

T ot a l Bu dget

CEB -Int erviewed 3 € 1 .9 3 8 .000 € 8 2 .000 4 % € 5 .000.000

T otal 3 € 1.938.000 € 82.000


Table 30 CEB - Investments

A verage Leverage


(A )

Cu rrent Inv est m ent s

(B)

%

B/A

A vera ge size A v era ge cu rrent

investm ent

CEB -Int erviewed 55 € 7 4 .1 6 5 .000 € 5 00.000 0 ,6% € 24.7 2 1 .6 6 6 €1 3 3 .000

T otal 55 € 74.165.000 - - € 24.721.666 -


Two projects funded by CEB-ELENA consist of refurbishment in the social housing apartments and buildings. TA provided has been used for several activ ities, among others:

selection and integration of sustainable technologies including heating, solar, LED-lighting and connection to district heating;

collaboration, purchasing strategies and realising economies of scale;

development of strategies (communication, financing, risk-sharing, etc.) in buildings where companies

share the ownership with other private ownership.

The combination of this activ ities is innovative from the organisational point of v iew. Social housing associations will benefit from the knowledge and experiences sharing. However , standing to the application procedure no ev idence on innovative financial scheme is provided.

Meanwhile the Rotterdam project is based on a sustainable transformation of primary schools. These schools are of the so-called MUWI ty pe of school-building. MUWI-schools and similar type of schools were built widely

in The Netherlands and elsewhere in Europe in the 1960’s and 197 0’s. The design is bas ed on a method of prefab production of concrete elements. The similarity in construction is the rationale for the serial approach. ELENA funds thus could contribute to find and understand the optimal approach in order to allow an intrinsic replicability of interventions.

EU added value

Based on the ev idences emerged during the interv iews, the beneficiaries are confident that the investments would have been possible even without the Technical assistance provided by CEB-ELENA. On the other hand,

the added value is brought by CEB-ELENA is about knowledge sharing as every action taken in this direction would have not been considered without ELENA.

Associated benefits

27 No quantifiable information on energy savings, renewable energy production and GHG emission reduction. Stichting Hav ensteder, Dutch social housing association shows sav ings for the 46%.

AB Alingsåshem, Swedish housing association shows sav ing for the 7 5%.



The project results in knowledge sharing thanks to cross-project and cross-corporation. Each of the corporation has access to four internal advisors on sustainability (instead of only their own).


ELENA CEB is in line with the overall objectives of PDA facilities. Financed projects reserve two aspects that are determinant for the PDA:

The contribution is dedicate to foster competences and knowledge in the energy efficiency sector, and

above all, the competences in managing investments and related issues in the context of social housing where more parties are involved.

The PDA finances the development of new collaborative managing scheme among actors involved in the same project.

The projects are not challenging on the investment side. On the PDS side ins tead, learning across projects and

across housing corporation is a very challenge activ ity , and PDA perfectly addresses these activ ities.

For instance in the school project in Rotterdam, PDA addressed several preparatory activ ities, essential to the final implementation of the whole project:

Program m e of Requirem ents. Development of functional and technical Programme of Requirements per school-building based on an approach in series. Including an analy sis of costs and benefits per school-building and an implementation of lessons learnt in the Wilgenstam Pilot-Project

and new technological developments.

Co-operation Model. Development of step-by-step model for co-operation between the Municipality and the school-boards. The room for an ESCO-co-operation will be elaborated in this step (ESCO: Energy Serv ice Company ). Development of an ESCO contract.

Specifications and estim ates. Development of specifications (an estimate) and a performance -

contract with contractors per school-building, based on an approach in series.

Procurem ent . Preparation and implementation of public procurement.

T echnical supervision. Preparation of construction-activities. This includes preparation of activities needed for temporary housing of the schools and / integration of the constr uction activ ities in the

education process.

Preparation of delivery , maintenance and monitoring. (Preparation and supervision of the) delivery of results of construction and (plan for) maintenance and monitoring.

Sharing of knowledge and experiences, communication about the project.


Not relevant.

T arget Beneficiary

In targeting project promoters, the CEB-ELENA facility has to fulfil both the ELENA and the CEB social eligibility criteria. In this light two funded projects have dealt with social housing association committed in

retrofitting existing condominiums and related facilities and one project faced the issue adapting the public buildings reserved to education and training to the highest standards, increasing the quality of life of students, teacher and public employ ees.


Inside CEB, one person was in charge to organize the communication and marketing activ ities and also to manage the CEB network when working on ELENA projects. In this, the CEB’s country officers ensure a close cooperation with project promoters, while the assessment activ ities are carried out by a central technical

department.



Figure 48 - Structure of the CEB-ELENA facility.

CEB-ELENA implementation showed relevant implementation problems, which brought to a low uptake of the Facility . From one hand, the relatively light administrative burden required by the PDA was appealing. From the other, problems have been highlighted on the role of the Managing entity and the link between TA and investment funding.

Dissem ination

A moderate dissemination activ ity has been carried out so far. Nevertheless , the CEB believes that the involvement of consulting partners has a more strong impacts on this activ ity , because they may have a more incisive communication channels with potential beneficiaries.

3.6.5 Sustainability Long lasting im pacts and Capacity buildings

Projects are in the very initial stage and an evaluation of the long lasting impact s can be biased. According to

CEB and the beneficiary interv iewed long lasting impacts and impacts on capacity building should be considered only in a potential way .

3.6.6 Coherence and Synergies No overlap has been experienced, since no similar fu nds were know by the beneficiaries. The Dutch social housing project underline during the interview that regional and national subsidies in the “spirit of ELENA “ do not exist.

3.7 Evaluation of EBRD-ELENA

In assessing the EBRD-ELENA facility , it has to be underlined that, beside the public documents delivered to the EC, the evaluator has only two interv iews over which base the assessment. In fact, at the time of this evaluation, the facility had granted only one project which did not allow a similar evaluation of the initiative as the one performed for the other facilities. Furthermore , the project is in a very early stage.

Further information regarding the reasons that hampered the uptake of the ELENA facility in the Eastern

Europe will be delivered within the final repo rt a dedicated research.

3.7.1 Brief description of EBRD-ELENA’s features The European Bank for Reconstruction and Development (EBRD) was founded in 1991 to cre ate a new post-Cold War era in Central and Eastern Europe, furthering progress towards market-oriented economies and the promotion of private and entrepreneurial initiative. The EBRD is currently owned by 64 countries, the European Union and the European Investment Bank. It supports projects that facilitate modernisation,

efficiency improvements and the introduction of state-of-the-art technologies in power generation, combined heat and power plants (CHP), and oil refineries. In addition, the EBRD focuses on smart grid investments that upgrade and extend existing power networks and lead to reliable and efficient transmission and distribution of energy and the integration of much needed new capacity from renewable energy sources.

CEB

Application

Beneficiaries

ELENA PDA+

Loans

EC

Reporting



The EBRD also provides technical assistance to the energy sector, alongside its investments. This includes technical and energy efficiency audits, technical and financial analy sis of investment plans, and assistance

during project preparation and implementation. Since 2012 the EBRD signed the two Contribution Agreements with the EU for the ELENA mandate. € 10 million have been allocated so far (€ 5 Million in 2012 and € 5 Million in 2013), to promote energy efficiency projects within its eligible countries 28.


The first € 5 Million budget allocation of which € 3 Million entered in the trust account, was not successful

then, as provided in the contribution agreement the EBRD returned € 3 Million amount to the EU. ELENA EBRD has so far been successful in funding one project in Lithuania: "VIPA ESCO". In the table below, the economic and environmental impacts are presented.

Table 31 EBRD - Impacts on EU Contribution and Investments

T otal budget Con tribution Planned Investment

€ 1 0.000.000 € 262,854 € 5 ,300,000


Table 32 EBRD - Expected Impacts on “20-20-20” objectives

Expect ed energy sa v ing [MWh /y ]

Expect ed RE produ ct ion

[MWh /y ]

Expect ed GHG redu ct ion

[t CO/y ]

3 ,930 0 8 7 6



The investment project will include several tenders for ESCO/EPC projects in indiv idual public buildings or

groups of public buildings. Public buildings will be proposed by the Ministry of Energy and VIPA whereas the technical feasibility assessed and tender documentation prepared by the con sultants. The project has not performed particular innovative financial scheme. EPC is a common contract that can be considered complicated and innovative at very local level, while VIPA is a national public ESCO. Some innovative points can be found in the strong collaboration with the Ministry of Energy and Central Project Management Authority (CPMA). In fact for this project soft loans are provided to ESCOs by Energy Efficiency fund of the Ministry of Energy composed by EU structural funds.

The EBRD and VIPA are thinking on the creation of an investment fund which could refinance ESCO company’s loan by buy ing the future cash flow payments. In that case ESCO has no loan obligations to the energy efficiency fund. Detailed consultations are required before a final decision with:

The Ministry of Energy , who are the key promoter for the development of the ESCO model;

The Ministry of Finance regarding the function separation of CPMA and consultant. CPMA is the main

organisation dealing with street lighting refurbishment (modernization) projects, while the consultant is in charged for the document preparation, support to the applicants, facilitator of carrying out procurements.

EU added value

The EU added value of the only funded project is moderate .

Associated benefits

Not relevant, in this early project stage.


28 Bulgaria; Croatia; Cyprus; Estonia; Greece; Macedonia; Hungary; Latv ia; Lithuania; Poland; Romania; Slov akia; Slov enia.



Based on the interv iew with EBRD, it emerged that PDA is essential for overcoming barriers such as lack of competences, especially in Eastern Europe, but it shall envisage both project preparation and implementation

support. According to EBRD where the PDA does not offer implementation assistance – even if the beneficiary clearly lacks implementation capacities – it can undermine the success of the project.

This statement highlights the main misalignment between the ELENA model and the ty pical EBRD operational scheme, which foresees TA supporting even small local authorities in both project stages and the same EBRD’s staff underline such difference.

Notwithstanding such diversity , EBRD tried to implement the ELENA model attracting the Lithuanian beneficiary (VIPA) which enter the process:

to have an opportunity to gain new and further development of the current set of competencies whilst implementing projects in the energy efficiency field;

to have funding ensured for the projects to be realised.

In principle, EBRD-ELENA fulfilled the basic needs of the beneficiary . The activ ities carried out under this

project are essential and at the base for the creation and practical application of the ESCO model against public buildings refurbishment. These activ ities consist of:

the preparation of the ty pical documentation required for implementing the ESCO model (standard contract, ESCO company selection criteria, various risks etc.);

the application of the ty pical documentation for the implementation of the spec ific projects.

The related investments will have a good role in stimulating both market and public authori ties against energy efficiency .

3.7.4 Effectiveness and Efficiency It would be difficult to draw conclusions on the many dimensions related to effectiveness and efficiency based on a single project funded. It can be said that, with some evidence, the EBRD-ELENA facility simply didn’t take

off. In the evaluator’s v iew, from one hand, EBRD did not adapt its operational scheme to ELENA and, from the other, the available budget was not enough to dedicate a specific line of activ ity to it.

Figure 49 - Structure of the EBRD-ELENA facility.

Notwithstanding the huge activity of EBRD on energy efficiency in the Eastern European countries, no room for

cooperation was created there. Furthermore, it has to be highlighted that being a development bank, EBRD have a restricted access to the market since it cannot directly address Public Bodies.

3.7.5 Sustainability With only one project in the pipeline is not possible to evaluate how much this model will be replicated.

3.7.6 Coherence and Synergies

EBRD-ELENA does not show sy nergic relationship with neither with other EBRD’s facilities nor with other funds available in the Eastern European countries.

EBRD

Application

Beneficiaries (private)

ELENA/ +

Loans

EC

Reporting



4 Conclusions and recommendations

4.1 Conclusions on the overall Programme

4.1.1 Impacts/Achievements

According to the article 38 of CIP Decision, the Intelligent Energy Europe II programme 2007 -2013 shall:

boost investment in new and best performing technologies in the fields of energy efficiency, renewable energy sources and energy diversification, and;

remove the non-technological barriers to efficient and intelligent patterns of energy production and

consumption by promoting institutional capacity building at local and regional level.

More specifically , the second objective is tightly related to the PDA mission.

The PDA facilities played a role in strengthening the uptake of energy efficiency investments, across the time when the Energy Efficiency Directive (EED) (2012/27/EU) was issued and, therefore, when there was a need of putting energy efficiency to the attention of public and private operators. With respect to renewable energies, in many European countries the steep growth of installations has been generated by national measures, issued in order to comply with the Directive 2009/28 (“RES Directive”).

Table 33 provides an overv iew of the estimated values of inv estments trigged by the PDA facilities (above 5 billion euro). ELENA was responsible for 91% of the total planned investments, mainly thanks to the contribution of the ELENA EIB of approximately 4.6 billion euro. A significant result was achieved by EASME’s MLEI-PDA , which accounted for 9% (close to 500 million euro) of the total planned investments. ELENA-KfW, according to the approved projects, should generate initiatives for around 180 m illion euro, above ELENA-CEB with around 7 0 m illion euro.

Table 33 – Expected investments triggered by PDA facilities

PDA Facility

Total Planned Investment %

ELENA € 4.924.136.489 91%

CEB € 7 4.1 7 5.000 1 %

EBRD € 5.300.000 0,1 %

EIB € 4.663.627 .7 36 86%

KfW € 1 81 .033.7 53 3%

MLEI € 482.848.577 9%

Total € 5.406.985.066 100%

As discussed in the Report, ELENA-EBRD’s result appears negligible. By the end of the Programme, such results should be enhanced thanks to residual resources in the Managing Entities budget.

The total planned investment consists of mixed projects (51%), pure energy efficiency investments (22%), initiatives in the field of clean public transport (22%), and pure RES investments (2%).

The main objective of the PDA programme was to remove the non -technological barriers hampering investments in the mentioned field due to the existing lack of skills, particularly in the domain of Public

Administration’s. The PDA Programme addressed this gap by going bey ond business-as-usual organisational and financial models.

Looking at the results of the survey , feedback from the involved actors seems to confirm that the PDA Programme:

provided a contribution to the development of EE, RES and CT;



helped to support project development going beyond the existing practice organisational and f inancial

innovation.

An element of interest arose both from the survey and the face-to-face interviews, namely the higher emphasis on innovation by MLEI-PDA compared to ELENA -PDA (both from a financial and organisational point of v iew). This is a desired outcome of the selection carried out by EASME, while ELENA ’s mission (and EIB-ELENA, in detail) preferred investments with a higher amount.

From the analy sis, the innovative content of many PDA -funded projects clearly emerges. The innovation resides, for instance, in the use of Energy Performance Contracts (EPC), the design of revolv ing funds to

support the investment phase and organisational solutions such as Project Implementation Units.

As mentioned in the previous sections, within MLEI-PDA a specific effort was made to obtain such results. The analy sis shows many instances where ELENA-EIB applied organisational and financial innovation schemes, such as broad PPP solutions.

PDA facilities contributed to disseminate many models that aimed at promoting energy efficiency solutions which were not widespread at a regional and local level and can now be replicated. Innovation is not at the core

of every facility , but PDA stimulated the production of models and exemplary cases.

It would be interesting to investigate how PDA facilities can maximise their impacts in the next months to the benefit of a wider audience.

Regarding energy and environmental impacts, it is only possible to provide estimations, due to the early stage of most of the projects. Most beneficiaries expect the impacts to be somehow lower than planned, due to different reasons like overestimation in the preparation phase, reduction of the project span and difficulties in engaging indirect beneficiaries (e.g. the expected number of mu nicipalities).

Table 34 - PDA facility energy and environmental impacts

Energy Savings [MWh/y]

Renewable Energy production [MWh/y]

GHG Emission Reduction [t CO2/y]

ELENA 3.009.445 627 .699 956.651

MLEI 1 .134.07 2 7 16.959 502.7 34

Total 4.143.517 1.344.657 1.459.385

Source: PwC elaboration on data coming from the Managing Entities , DG ECFIN, DG ENER, Interviews

A precise estimation of the energy and environmental impact of the projects supported by the different P DA facilities will only be possible when all of them are completed. Achiev ing the objectives as described in application stage is not mandatory and no sanctions are applied when such objectives are not achieved. For this reason, achievement of the objectives is not among the beneficiaries’ highest priorities, for the main rules of the PDA programme are financial, not environmental. However if the final beneficiaries succeeded to trigger the expected investments, it should logically contribute to significant sustainable energy impacts.

The evaluation of the associated benefits complements this v iew. Qualitative data were collected about increased life quality, the creation of local competences and the generation of sav ings for other investments in order to assess the additional impacts. Over half of the surveyed actors reported the acquisition of technical and management competences as a benefit . This result reflects an overall positive evaluation of the PDA Programme. In the majority of the face-to-face interv iews the same positive perception ar ose of the mobilisation stimulated by ELENA and MLEI, which was among the most important objectives of the PDA programme. Due to the early stage of the majority of the projects, no significant employ ment impacts can be

reported. Looking at the amount of expected cumulated investments, as shown above in Table 33, effects on job creation should not be negligible in overall terms.

The evaluation of the EU added value is a particularly relevant element to be considered for the decision of a continued intervention of programmes by the Commission. Therefore, the EU added value of the PDA programme will be discussed into detail in the sections below.

First of all, it should be taken into account that the IEE II – PDA Programme has been the first to support the development of investment programmes and projects in the area of energy efficiency , renewable energies and

clean urban transport with a EU-wide geographical scope. Its added value has not been the same in all the EU Member States. In Germany , for example, the availability of similar facilities by KfW and the possibility of funding project design on balance sheet limited its implementation. The same applies to Eastern Countries. It is likely that in those countries the competition of other facilities with a less challenging approach (see, for



example, the Municipal Finance Facility with a leverage factor of 1 :5) was significant, especially once considered the wider coverage of the project life cy cle, up to the implementation phase.

Even if a country has the necessary domestic funds to fund project design, EU funds may be allocated. For example, although Denmark’s municipalities have the capacity to fund and implement project design, the PDA programme has served as an additional financial resource in order to deliver even more projects. In other countries, like Italy , ELENA and MLEI were the only financial support since no other financia l sources were available.

Ev idence presented in the report, has been gathered that PDA facilities provided support in situations where national and regional programmes did not. Lack of alternatives was confirmed by a significant part of the

survey respondents and by the MEs. Both report that many projects would have been implemented without the intervention of ELENA or MLEI-PDA. Even more persuasive feedback was provided by MLEI-PDA’s beneficiaries. EU value is generally considered to be tightly linked to innovation. As highlighted above, EASME selected more innovative projects, which supported the beneficiaries in the development of creative models that could not have been created without this choice of selection. The feedback about ELENA is more dispersed and can be summarised as follows29:

EIB-ELENA: apart from the City of Paris project, all the beneficiaries declared that the project would have not been carried out without PDA, or at least to lower extent;

KfW-ELENA: the opinion that the projects would have been carried out even without the support of the facility (although to a lower extent) is very common among the interviewees, especially within the Austrian projects;

CEB and EBRD: all four interv iewed projects stated that the PDA has not been a key factor for the main success of the initiatives.

The conclusion is that PDA facilities led to EU added value in most of the cases and that a new programme could therefore be leveraged. If grant supports to project design are successful under the condition of generating real investments with multiplier effects, such examples shall be replicated at national and regional

level and the current European Structural Funds Programming period would be the exact place where it shall take place. In this case, the PDA programme as we know may be reshaped.

Otherwise, if national and regional authorities do not inherit this lesson, the reasons for a EU-level PDA are still there. To this purpose, coordination between DG Energy and DG Regio to disseminate the model and assist national and regional implementations may be advised.

Finally , the impact of the PDA programme on national policies has been limited, with the exception of a couple of single cases. One of the reasons to this limitation could be that ELENA and MLEI facilities rather had a local

impact because they were attached to the Covenant of May ors’ (CoM) initiative as well as to SEAP or other local authorities. Based on the interv iews with the beneficiaries, the evaluator’s perception is that this link is not direct. There are ev idences that many projects have served as showcases, and this fact should be taken into consideration by National and Regional Managing Authorities when planning their ac tions. There is ev idence that local sustainable policies were supported, although the number of funded projects ( when compared to the number of signatories of the CoM) is negligible.

4.1.2 Relevance

The PDA facilities have been set up to support public local authorities (regions, cities, municipalities and groupings of those) in developing bankable sustainable energy projects with the objective of reducing CO2 emissions and improving energy savings. The survey responses about the inclusion of PDA funded initiatives into a sustainable energy action plan at a local level indicated results in this direction in the form of SEAP, CoM or other local authority action plans. Although it is too early to state that the objectives have been fully met, the benefits of the Programme have been reaped and the role play ed by the PDA facilities by enabling local

authorities to bring their plans forward can be considered as a desired result.

Furthermore, there is ev idence that the PDA facilities helped to tackle the issues hampering the market uptake of energy efficiency at a local level by supporting Public Administration capacity building . Both in terms of design and implementation, ELENA and MLEI-PDA helped local communities to deliver investments in the field, which in turn created opportunities for private operators.

29 These statements are derived form the site visits activity, as a summary of the feedbacks received during the interv iews. Some of them were precise and direct and do not leave much space to the analysis and interpretation. In the second stage of interv iews they will be generalized and ev aluated in a wider context .



In the future, it is recommended for the PDA facilities to primarily focus on energy efficiency support, and secondly on clean urban transport because of its sizeable impact on CO2 emissions. Since renewable energy

projects use mature technologies (PV, biomass) they could need support for project design. Since 2009 in fact, support policies have helped to create enough technical and financial capacities in the market and it seems difficult to create new models in this field leveraging on local level.

4.1.3 Effectiveness and efficiency The first point to assess with respect to effectiveness and efficiency is the clarity of legal frameworks. The legal framework includes both the main PDA rules that allow to identify eligible beneficiaries, projects and costs and

the rules for project implementation (e.g. innovation contents, leverage factor, project duration, percentage of contribution, disbursement timing, etc.).

In the first stage of the interv iews with the MEs, some of the beneficiaries signalled an initial lack of awareness about elements related to the legal framework. At this stage, language barriers were reported as the promotors’ main concern. These elements should be taken into account for future initiatives, in accordance with the depth the Commission identifies as desired for the implementation of the PDA Programme.

An interesting comment can be made about innovative-content projects that could be selected and supported.

In function of the project’s dimensions significant differences were observed between the projects, but overall, promoters obtained good results and the main v isibility targets of the PDA Programme were achieved.

The provision of a leverage factor did not impede the use of PDA and can even be considered as an incentive for beneficiaries to pursue result-oriented actions and to find the right balance between grant expenditure and feasible investments.

The three-year duration of the project development phase was considered problematic for the most complex

projects, especially in countries where project approval, tendering processes and administrative petitions can take a long time. Depending on the investment amounts to be generated, an extension of the project duration is therefore feasible.

Finally , project promoters did not encounter particular difficulties in covering the PDS costs. Most beneficiaries positively rated the disbursement programmes as agreed upon with the Managing Entities. However, management of the disbursement is a delicate activity. The beneficiaries have in fact in many cases, especially for successful ones, set precise objectives for the grant absorption in relation to the current investments, thus

seeking to avoid unbalancing the leverage ratio and therefore keeping it constant along the development of the project. This avoided that the obligations of the beneficiaries under the grant agreement became too cumbersome and avoided that the beneficiary would face problems with both the EC and the MEs. Indeed, when a project beneficiary encountered problems in achieving the investment, this would result in a undesired debt, which is clearly counterproductive in respect of the final aim of the PDA: giv ing support to local authorities.

With respect to the targets, the PDA Programme allowed ELENA and MLEI-PDA facilities to attract different

kinds of beneficiaries, depending on the investments level to be generated. As presented in our analy sis, the MEs acted in compliance with these requirements.

As an overall judgement on effectiveness, it can be concluded that the PDA programme has generated the most relevant results with Regional Authorities (or other aggregators such as large Municipalities) that have a dedicated energy department. For those cases, it was possible to identify both innovative financial/operational schemes and higher capacities for self-improvement. Considering these elements, we think that specialised bigger municipalities, regional/provincial authorities, and bodies established by groups of municipalities can be

a suitable target for the future PDA programme. Since this programme is managed by the EC, it can exploit its potential throughout all the EU Member States. It is difficult for small projects to develop very innovative operational or financial schemes, mainly due to their lower economic interest for operators. For this reason, smaller municipalities have not gone bey ond business as usual with respect to operational and financial schemes.

Regarding the adequacy of available resources, as an example, we observed that ELENA’s facilities have

committed around 62% of their budget, reaching about 7 81 million euro on more than 7 0 projects. Taking into account all the known projects in the pipeline, ELENA can achieve an overall amount of committed resources up to 102 million euro, out of a total of 132 million euro. This means that, comparing feasibility projects with available funds, this could be considered adequate. In this context, it can be said that, even when the number of large municipalities participating to the CoM is taken into account, the potential demand for funding could be higher. As an indication, cities with more than 50.000 inhabitants count 662 CoM signatories whereas cities with more than 250.000 inhabitants only count 96. Within the 2014-2020 programming period, the Directive



2012/27 /EU shall incentiv ise an increase of the number of projects in the field of energy efficiency , so the demand for technical assistance is likely to boost. A new programme should take this consideration into

account.

Considering efficiency , it was possible to map the entire process put into place by the MEs, from the engagement of project promoters to the dissemination of results . Their support was therefore positively evaluated.

A critical issue arose from our survey related to communication activ ities. Although several and diversified actions have been put in place by MEs to raise awareness about the funding opportunities, some beneficiaries clearly indicated that these actions were often ineffective.

As for the dissemination activ ity , MLEI-PDA and EIB-ELENA’s MEs were particularly proactive, but it is too early to measure the effects. Dissemination activ ities at a European level are currently addressing a very restricted group of project promoters. In order to increase the awareness about the PDA programme and in order to disseminate results in a targeted manner, it is recommended to strengthen the collaboration with European associations (e.g. Energy Cities, CoM Offices, etc.) and with ESIF’s MEs.


Activities funded by the PDA has proved to produce potential lasting impacts. By lasting impacts, we mean the creation and use over the time of:

new skills and competences to deliver additional projects;

new forms of cooperation among the actors in order to fund projects;

innovative operative and financial schemes, likely to be replicated.

Most beneficiaries interviewed during the site v isits asserted that their capacities were enhanced thanks to the technical assistance they received, and many of them showed interest to undertake similar projects in the future. Example of such projects are the purchase of works and serv ices in the market, the reservation of a project management role for public authorities, or the creation of projects based on the new and improved capabilities.

Regarding the organisational and financial schemes, dissemination activ ities carried out so far seem to have been helpful in sharing knowledge and practices. On the other hand, energy performance contracts are ta king momentum, together with the ESCO market, although we are still observ ing limited volumes.

In order for the programme to be sustainable, we recommend that all the lessons learnt within the PDA programme be rapidly transferred to the new Structural Funds programming period. More specifically , the model of a facility supporting the project design phase should firstly be replicated at a national and regional

level. Secondly , the organisational and financial models developed thanks to ELENA and MLEI -PDA should serve as an example.

Furthermore, evidences showed that information exchanges and cross-fertilisation of ideas have taken place between beneficiaries. Since many projects are still at an early stage, not all of them proved to be successful y et. However, many ongoing projects have shown satisfactory outcomes and can be considered “national champions”. Therefore, they could serve as a model for replication, generating a bigger stimulus and empowering sustainability mechanisms.

4.1.5 Coherence and synergies Sy nergies between PDA facilities and the EU Cohesion Policy did not result to be a common practice. According to the responses obtained from the interviewed actors, synergies are not structured. A desk research about the 2007 -2013 Operational Programmes throughout the EU 28 states that dedicated financing lines for energy efficiency are only present in some of the Operational Programmes, and if they are , it is not possible to match PDA-supported projects with ERDF/ESF-supported projects.

Nonetheless, such activ ities seem to have kicked off recently , because they are a direct consequence of the operational and financial model developed in the design phase of the PDA (see Recommendations).

4.2 Conclusions on each Facility

4.2.1 MLEI-PDA The overall evaluation of MLEI-PDA is positive.



MLEI-PDA applied the most structured promotion, evaluation and awarding process, thanks to the call for proposals mechanisms developed by EASME.

In 2012 and 2013, the MLEI-PDA facility had an absorption capacity which exceeded 6 million euro: 6,61 in 2012 with 9 awarded projects and 6,24 in 2013 with 7 awarded projects. In 2014, the awarded grants amounted to 3,08 million euro. On top of the reduced number of projects, there was also a reduction in the average size of the foreseen investments.

Regarding the MLEI-PDA expected results and outcomes, we reported the following:

As for organisational and financial innovation, many granted projects can serve as models for replication,

as a valuable outcome of the selection procedure which excluded business-as-usual solutions from funding, consistently with the mission;

With regards to environmental targets, the 22 funded projects achieved the following results:

Energy sav ings: 1 .134.072 MWh/y

RES energy increase 716.959 MWh/y

Total CO2 reduction 502.734 t CO2/y

So far, MLEI-PDA counts 22 awarded projects with a total contribution of 15.936.210 euro and an amount of planned investments of 482.848.577 euro. Since 2012, 43% of the awarded budget has already been disbursed,

but only one project can be considered as finished. As for the 18 projects that were subject to interviewing, only 23% of the planned investments were generated.

The slow growth of the amount invested can be justified by the innovative schemes MLEI-PDA ’s projects are developing. The “bundling” strategy , which involves the cooperation of project promoters acting as intermediate entities able to jointly manage several smaller projects together, was positively evaluated. The bundling strategy has proven successful to develop economies of scale in project preparation and implementation and to involve market operators that are attracted by larger scales of investments.

Although bundling strategy is positive, it also requires a time-consuming stakeholder engagement process. Considering this, it is recommended to extend the duration of the project development phase for MLEI-PDA-funded initiatives, or at least to allow for greater flexibility in timing.

About EU added value, MLEI-PDA ensured a support in developing innovative schemes that other national facilities did not. This is particularly true in countries where local authorities face liquidity scarcity and difficulties in access to finance and, moreover, where the sustainable energy market is not mature enough y et.

In these contexts, MLEI-PDA has been a key factor in responding to the needs of project promoters wh ose initiatives would have been abandoned if they had not received the PDA help.

Furthermore, the new models developed by the PDA supported projects are stimulating local markets to move forward to alternative solutions in which ESCOs will play a key role. In this light , the private investments in the energy efficiency field will benefit from the generated market enhancement and from the new capabilities of the public Authorities in stimulating investments and in fostering sy nergies with other national or local facilities (e.g. Structural Funds).

EASME made sure to select and fund projects of high quality , and this had an impact on the effectiveness and efficiency in managing the MLEI -PDA facility . EASME achieved these results through a detailed call for proposals and strict project assessment procedures that involved external evaluators. However, an issue related to fund allocation came to light during the interv iews with EASME’s staff. The IEE Programme foresees and indicative budget to allocate to MLEI -PDA as well as to other related calls, and sometimes candidates are in competition to obtain the funds. In some cases, projects were therefore placed on a “reserve” list due to allocation issues (and not due to project quality issues). Although IEE fund applicants are usually aware of this

risk, it might be worth rev iewing the allocation mechanism in order to acknowledge the effort of municipalities in preparing v iable projects and to avoid asy mmetries with other PDA facilities.

EASME has also been very proactive in the communication activities for the promotion of the facility and in the dissemination of results, creating a network involv ing ELENA’s beneficiaries in addition to MLEI-PDA beneficiaries. As a result of this proactive attitude, we found a diffused awareness among beneficiaries about the need of generating innovative projects with replicability potential. Building on the success of this approach, it is important to further develop such a knowledge sharing solution and to involve a wider audience (see

Recommendations).

Some projects benefited of national funds to cover investment amounts, and several other projects are going to mix national or regional schemes to meet the project needs. This is an exemplary case for the sy nergies.



4.2.2 ELENA-EIB

The overall evaluation of ELENA-EIB is positive.

The total ELENA budget managed by EIB was approximately 93 million euro in five y ears. At the time of this evaluation, EIB-ELENA counted 41 signed projects with a total contribution of 7 2.865.683 euro which are committed to mobilise 4.663.727.736 euro of investments. As for the 21 interviewed projects’ promoters, so far 54% of the granted contribution has been disbursed and 39% of the planned investments has been delivered.

While in 2010 and 2011 the total granted contribution varied from 9 to 15 million euro, in 2012 and 2013 the absorption rate of the ELENA -EIB facility has been stable around 12 million euro. In 2014, ELENA-EIB was

successful and doubled the grants as opposed to 2013 to 24 million euro.

The planned investments are expected to generate 2.860.369 MWh/y of energy sav ing and 618.580 MWh/y of renewable energy production leading to a GHG reduction of 87 5.565 t CO2/y .

Within the ELENA -EIB’s facility , many projects were successfully developed by the use of a public-private-partnership mechanism, which is primarily based on EPC schemes and operational schemes involv ing a plurality of actors. From a financial point of v iew, recourse to ordinary credit lines has been a common approach among project beneficiaries.

In relation to the EU added value, ELENA-EIB PDA has play ed a crucial role. ELENA -EIB PDA enabled local authorities to tackle the lack of capacities throughout the development of v iable projects. Without this aid, many initiatives could not have been developed. Mainly the large projects resulted in increased investment opportunities in local markets, which in turn allowed for the creation of relationships between local authorities and private operators. Beneficiaries declared that the projects (except for the City of Paris project) could not have been carried out without the ELENA -EIB support, or at least not to the same extent.

EIB’s management has been positively rated by beneficiaries and the available ev idence confirms this judgement. Indeed, the Bank has been effective in ensuring prompt support to projec t promoters, clarify ing doubts over the eligibility criteria of projects and in helping the fine-tuning of project proposals. The Bank’s staff ensured the quality of the evaluation procedure by rely ing on financial and technical rev iew procedures. Project monitoring was efficiently carried out through reports that were delivered within defined deadlines, although such deliverables do not have a default structure imposed by the EIB.

Many experiences were positively evaluated when it comes to providing evidence of EIB-ELENA’s effectiveness.

Cases such as the Greater London Authority or the AESS-Province of Modena can be considered successful initiatives to be replicated in future. They have been able to bundle together diversified project s and acted as centre of competence for other smaller public bodies (e.g. municipalities, schools department, etc.). Moreover, they generated large refurbishment plans in private real estate.

The most valuable long lasting impact for such Authorities/agencies is the creation of new capabilities and replicability potential.

With regards to the synergies with other supporting schemes, among the 21 interv iewed projects’ promoters,

there are cases in which additional national/local supporting schemes have been deploy ed (EOL-Municipality of Ljubljana, Province of Modena, LED PACK Management Namy slow, REDIBA-Diputacio de Barcelona).

It can also be reported that some beneficiaries structured funds equipped with EIB resources and managed by local financial institutes with the aim to foster the market uptake of EPC contracts. Such funds have not been fully utilised y et, like in the following cases:

Province of Milano: the fund, managed by Mediocredito Italiano, was intended to finance 65% of the

investments undertaken by awarded ESCOs. In fact, only one of the companies forming the Temporary Enterprise Association awarded in the first call has turned to the fund, while another company was deemed unsuitable.

Province of Chieti: despite initial difficulties, the fund was established by Mediocredito Italiano. The fund was intended to help the Third Party Financing sy stem adopted for this project. The awarded ESCOs do

not have any obligation in using such available funds and no resources have been used . It should be noted that the awarded ESCO financed 70% of the investments through an external bank loan with an interest rate of 3,9%, which is much lower than the reported 7 ,5% proposed by Mediocredito Italiano.

REDIBA-Diputacio de Barcelona: despite the fact that the EIB made funds available to be invested in the REDIBA initiative, the projects were rejected on a constant base by the local saving banks that were

managing the fund.



Cost of funding is, therefore, an issue when it comes to pass from pro ject design to implementation, but it can be said that, with EIB’s contribution to quality design, financial feasibility has been ensured and the pathway to

other funding sources established.

4.2.3 ELENA-KfW The overall evaluation of ELENA-KfW is moderate.

In contrast with the other MEs, KfW operates by means of PFIs, which represent the counterpart for the allocation of the ELENA annual budget, combined with a global loan model. So far, contribution agreements have been signed with 6 PFIs covering France, Germany, Austria, Denmark, Poland and Italy . PFIs have been

allocated a total ELENA fund of Euro 15.648.000 and global loans of 325.250.000 euro. By means of this allocation, the ELENA-KfW facility set up an innovative mechanism in which financial institutes and public authorities cooperate at a local level in order to generate an uptake in sustainable energy investments. This model couples the technical and administrative competences of local authorities with the financial knowledge of banks.

At the time of this evaluation, only three PFIs were active in generating projects: BPCE (France), ERSTE Bank (Austria) and KommuneKredit (Denmark). These PFIs have granted 30 projects for around 6,18 million euro

stimulating an overall amount of investment of 181 .033.7 53 euro. These projects are expected to generate 417 .7 5,8 MWh/y of energy sav ing and around 6.000 MWh/y of renewable energy production30.

The absorption capacity of the ELENA -KfW facility has been very unstable. Although the facility was established in 2011, it took much time to take off. This was due to the cumbersome process that KfW had to activate in order to reach the final beneficiaries. Nevertheless, the evaluator’s opinion is that ELENA KfW will be able to reach more final beneficiaries in the future, thanks to the communication work that was carried out

among the PFIs. This expectation is strengthened by the increasing importance that financial institutes are giv ing to the energy efficiency investments. However, despite a proactive promotion of the facility towards the targeted PFIs across Europe, KfW has not y et been able to allocate its remaining budget of 8 million euro to new PFIs. This underperformance confirms the difficult implementation process o f the ELENA-KfW facility . With regards to the capacity of the PFIs to effectively commit the total received budget, the process is still in an initial stage and it is too early to provide a point of v iew on the procedure.

Considering the absorption capacity of ELENA -KfW, BPCE’s approach is relevant. According to their approach,

cooperation starts at the very beginning of the application phase and this allows for constructive discussion on how to shape projects. Local banks and local authorities work together to fulfil ELENA -KfW’s requirements and to draft an application compliant with its requirements. As occurred in Pay s Voirronay s’s experience, cooperation stimulated the innovative use of ordinary credit lines. Such lines have been established in order to facilitate the condominiums refurbishment, which stimulated private investments.

The mechanism generated valuable results. It enabled public bodies and BPCE projects to bundle projects at a provincial or regional level. This approach is similar to what have been successfully done in the ELENA-EIB

and MLEI-PDA facilities.

The PDA programme turned out to be less suitable for single small municipalities, even though some innovative content was generated thanks to the programme. EU grants have generally been used in a different way according to the size of the funded initiative. While for larger initiatives the ELENA -KfW facility aimed at overcoming the lack of competences, the market immaturity and the unpreparedness of project promoters in undertaking energy efficiency investments, for smaller initiatives, EU grants were mostly used to provide financial resources to technical business as usual activities. This difference was reflected in the judgement about

the EU added value provided by the promoters of small projects, who generally stated that the project would have been generated even without the support of the PDA Programme, albeit to a lesser extent.

Th EU added value of the provided global loans, coupled with the ELENA grants, is not the same for all the EU Member States. In countries with adequate liquidity , KfW’s loans are hardly competitive compared to other financial resources. Coexistence of loans and the ELENA grant has been recognised by local banks as an enabling factor. Without this factor, new credit lines reserved for energy efficiency would not have been created.

Concerning the triggered type of investments, it can be highlighted that all four BPCE’s projects aim to foster the uptake of energy efficiency measures within the private sector. This represents a replicable model of cooperation with local banks, which are capable to effectively address the private stakeholders .

30 No indications in terms of GHG reduction are available on the provided documentation. The calculation is not possible due to the lack of knowledge about the starting baseline.



ELENA-KfW facilities’ management experienced some bottlenecks due to the longer implementation chain than other ELENA ’s facilities. Some beneficiaries highlighted that local banks or PFIs were not fully able to

provide the requested information at a first contact, but that KfW’s managers have been proactive in resolv ing issues by directly interacting with project promoters. At present, PFIs seem to be fully prepared to accomplish their role. Furthermore, they are acting in order to enhance the application and the reporting mechanism.

ELENA-KfW did not only enhance capabilities and competences among local authorities, but it also created potential for the development of skills related to new energy efficiency in the PFIs. This has to be taken into account when assessing the replicability and dissemination potential of projects. Local banks might be able to repeat the experience in other contexts thanks to the developed skills and the new mechanism, for example if

national/local TA grants are made available . The banks network under which the ELENA-KfW facility has been developed is likely to develop efficient way s for the dissemination of the results of the experiences.

As for the sy nergies with other supporting schemes it should be highlighted that none of the funded projects used grants made available under the cohesion funds. However, sy nergies with national/local funds have developed in countries such as Austria and France.

4.2.4ELENA-CEB

The overall evaluation of ELENA-CEB is fairly negative.

Among the public banks that were involved in ELENA ’s facilities, CEB had a social mandate. The CEB mission was to fund social projects for vulnerable populations. The CEB contributes to the implementation of socially oriented investments aiming at allev iating energy poverty targeting disadvantaged regions or populations . Under ELENA, it addressed public authorities and public bodies, encouraging the combination of ELENA within their own loans.

CEB received two contributions from the EC:

2011 budget: 3 million euro, but since no projects were approved, the funds were returned to the EU;

2012 budget: 2 million euro of which 1 ,9 million granted to three projects. In compliance with the CEB’s social purpose, two of the three granted projects are dealing with public housing

and the third one with public schools. These projects are committed to mobilise 106.700.000 euro of investments in the field of energy efficiency. So far, only 4% of the granted contribution has been disbursed and 1% of the planned investments has been delivered. Since the interviewed projects are in an early implementation stage, no comprehensive quantitative information is available for the final results of the initiatives in terms of energy savings, renewable energy production and GHG reduction31 .

Concerning innovation, although the v isited projects can be considered as good practices, their innovative

contents are limited in comparison to other PDA facilities. The ELENA-CEB grant has mostly been used to finance business as usual activ ities and to enhance collaboration procedures.

When assessing the EU added value delivered by ELENA -CEB, the interv iewed beneficiaries declared that the ELENA grants were not a key factor for the development of their projects, because the projects would have been developed even without the EU contribution, although at a different speed and scale.

ELENA-CEB’s work has been in line with the overall objectives of PDA facilities and with the CEB mission. Financed projects have successfully enhanced capacity building by managing energy efficiency investments and

by fostering collaborative schemes. These results are likely to have a lasting impact on capacity of the targeted beneficiaries to promote future similar initiatives. They are also likely to enlarge existing ones, even without the technical assistance provided by ELENA. Furthermore, the practices developed under the ELENA -CEB seem to be of easy replicability .

The implementation of ELENA-CEB was problematic and led to a low uptake of the facility . From the one hand, the relatively light administrative burden required by the PDA was ap pealing. From the other hand, problems were detected in relation to the role of the MEs as well as for the link between TA and investment funding.

About the communication activ ities, CEB mostly addressed consultants that got in touch with the project promoters. The two v isited projects stated that they got to know about the facility through the same consultancy firm. No particular dissemination activities have been carried out so far. The CEB believes that the involvement

31 The school project in municipality of Rotterdam expects 2.370 MWh/y of energy savings, 510 MWh/y of RES production, 599 t CO2/y of GHG emission reduction. The project Stichting Hav ensteder, Dutch social housing association expects 1 01 .000 MWh/y of energy sav ings, 36.7 43 t CO2/y of GHG emission reduction.



of consulting firms will have a strong impact on these activities, although it is not the primary objective of the PDA programme.

No relevant sy nergies were detected with other supporting schemes.

4.2.5 ELENA-EBRD The overall evaluation of ELENA-EBRD is negative.

In 2012 the EBRD signed the Contribution Agreement with the EU for the ELENA mandate. 10 million euro have been allocated so far (5 million euro in 2012 and 5 million euro in 2013), to promote energy efficiency projects in the eligible countries32.

The first 5 million euro budget allocation was not successful. Only 3 million euro was sent to the Trust Account and consequently, as provided in the contribution agreement, the EBRD partially returned that amount to the EU. At the time of this evaluation, ELENA-EBRD was only successful in funding one project in Lithuania (VIPA) with a grant of 262.854 euro. The project, that is currently in a very early stage, aims to deliver 5.300.000 euro of investment in energy efficiency. The investment should lead to a total energy saving of 3.930 MWh/y equivalent to a GHG reduction of 87 6 t CO2.

The activ ities carried out under the only project designed under ELENA -EBRD are essential for apply ing the

ESCO model in public buildings refurbishment. The Energy Performance Contract foreseen by the designed scheme can be considered innovative, and the preparation of standardized ty pical documents and tenders for ESCO is a key activity to support the development of the ESCO Market . Some innovative points can be found in the strong collaboration with the Ministry of Energy and Central Project Management Authority (CPMA). For this project, soft loans are provided to ESCOs by Energy Efficiency fund of the Ministry of Energy composed by EU structural funds. As stated by the project Beneficiary, the ELENA’s EU added value within the VIPA project

is uncertain.

The negative judgement on ELENA -EBRD shall be further justified, as the Bank is not new to energy efficiency financing. For example, the EBRD has mobilised over 13 billion euro since 2012 and has provid ed technical assistance to project promoters in the context of the Sustainable Energy Initiative (SEI). Such a scheme, coupling technical assistance with EBRD’s loans is common in the Bank’s operational model.

In summary , the limit of ELENA-EBRD resides in:

the internal competition between this facility and the others provided by EBRD in its area of operation;

the different approach to Technical Assistance which EBRD usually applies, including support in the design and implementation phase of funded projects, while ELENA limits its intervention to the design phase.

It can be said that the limited amount of resources budgeted on ELENA -EBRD did not stimulate a model

change and that extended TA support in the EBRD’s operation countries competes with ELENA .

4.3 Recommendations

4.3.1 Building on PDA programme’s lessons As highlighted in the conclusions, the IEE II - PDA programme has primarily achieved its strategic and operational objectives. Three facilities developed concrete solutions: ELENA -EIB, MLEI-PDA and ELENA-KfW. Although these facilities show a distinct financial uptake, we can build on the gathered experience for

further planning and programming of the PDA under the Horizon 2020 Programme.

There have been cases of particular success, which have tested organisational and financial solutions with the aim of delivering sustainable projects. In the future, enhanced dissem ination activit ies should be organised to raise awareness about these successful cases, in order to replicate them and reap the benefits of the efforts provided by the MEs and the project promoters under the IEE II – PDA programme. Furthermore, the identification of PDA’s cham pions is suggested, either at the EU or at a national level. In this way , such projects would be assigned the role of best practices witnesses in the current and future network

of local actors.

32 Bulgaria; Croatia; Estonia; Macedonia; Hungary ; Latv ia; Lithuania; Poland; Romania; Slov akia; Slov enia.



Although differences among Member States’ specific conditions shall be taken into account, a selection of best practices can be made and offered as examples both to H2020 -PDA applicants and to national/regional

authorities which will fund energy efficiency projects in the coming y ears, in line with the Directive 2012/27 .

T he IEE II-PDA Program m e thus generated replicable project design and im plem entation schem es. Moreover, the PDA program m e m ay serve, where relevant, as a replication m odel either at a national or regional level within the new ESIF’s programming period.

In order to preserve and amplify the lessons learnt from the IEE II -PDA programme, the two following actions can be carried out at the sam e tim e:

focussing H2020-PDA on projects aggregation/bundling in order to reach a certain critical

m ass and ensure cooperation between actors from different countries in order to further develop energy efficiency models;

providing guidance to National and Regional ERDF’s Operational Programmes to established PDA funding lines within the 2014-2020 actions.

The first action is consistent with one of the main conclusions drawn from the IEE II – PDA Programme, namely the higher EU added value value produced in initiatives where authorities/agencies acted as promoters by bundling or aggregating single municipalities’ projects. As highlighted in the Report, in such initiatives relevant economies of scale and learning curves have been gener ated more cost-effectively .

The second action is coherent with the need of serving small m unicipalities which (including the CoMs’ experience), have shown a significant interest in delivering sustainable projects . Ofthe 5.7 65 Covenant of May ors’ signatories, 4.624 have already presented a Sustainable Action Plan and 2.806 plans have been

approved by the EC. Considering that “only ” 94 projects have been supported under the IEE II-PDA, it is ev ident that the potential demand for technical assistance is high. In particular, 3.765 municipalities within the CoMs’ initiatives have a population smaller than 10.000 inhabitants and it is clear that they cannot be directly served by the H2020-PDA programme.

For this reason, and considering that the need for promoting energy efficiency projects will increase in the coming y ears, the subsidiarity principle should be properly applied when spending EU resources. It is

recom m ended to prom ote a specific cooperation action between DG Energy and DG Regio to build up the proposed scalable PDA model to be implemented at a national and regional level throughout the EU Member States.

In such a way , three issues will be solved:

the decreasing added value of a PDA EU centralised model, when small projects require funding;

the lack of sy nergies between the PDA and national/regional/local funds as detected up to the present

moment, and;

the dissemination of the models which build up further innovative models where Structural Funds are called in to create new instruments.

All the models developed within MLEI-PDA and ELENA present interesting features.

The MLEI-PDA facility engages beneficiaries by means of a call for proposals scheme, whereas ELENA’s MEs engage beneficiaries through a more informal process in which beneficiaries get directly in touch with them. Among the ELENA’s facilities, KfW chose a distinctive scheme , which involves national banks and, through them, even local credit institutions.

The involvement of PFIs in cooperation with public authorities ha s proved to be interesting and should be pursued in the coming y ears, provided that an efficient implementation sy stem will be established. An energy efficiency project that is delivered locally , is the result of the cooperation between the local authority , a

private service provider and a bank . Therefore, all of them can be used as channels to m ake PDA funds available and to multiply the initiatives in the sector. In this light, and leveraging on the past PDA’s experiences, the list of beneficiaries can be kept open , provided that beneficiaries play the role of project aggregators in an effective way .

It is recommended to improve the reporting procedure about the PDA program m e at the level of the beneficiaries, the MEs and the EC. In order to achieve this objective, it is recommended to establish a common online database in which the data about the grant expenditure and achieved results can be entered by the

beneficiaries and approved by the MEs. Such an online database will firstly create the possibility to monitor the uptake of the PDA facilities on a constant basis, and secondly it can serve as a communication tool.



Unexpectedly, financial reporting m echanism s have been proven inefficient. Monitoring and reporting activ ities were found to be insufficiently structure d. Moreover, data sourcing (for example in the evaluation

process) was more difficult than foreseen. Since monitoring and reporting schemes are among the pillars of all EU funding processes, the gaps in clear accountability framework have been surprising. Thanks to the cooperation of all actors (DG ENER, DG ECFIN, MEs) the financial progress has been rebuilt. It should be highlighted that, at the time of this evaluation , ELENA’s total non-allocated budget to final beneficiaries was around 50,7 million euro. Remedial actions should be taken to avoid budget decommitment.

Finally , com m unication about PDA should be im proved. All channels used in the past have been institutional and the beneficiaries stated that the communication activities within the PDA programme were not

effective. It is likely that the use of different media (such as social media) could help to spread messages in a more effective way. Therefore, it is recommended to develop a specific communication strategy. The objective of the use of Social Media is twofold. On one side, media effectively create and maintain a network of professional subjects in the scope of public authorities, public agencies, ESCOs and experts that are willing to “stress the points” of energy effic iency, supporting ELENA and MLEI cases. On the other side, they can contribute to share competence, promote new initiatives and disseminate positive results and goals.

© 2015 PricewaterhouseCoopers EU Services EESV All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers EU Services EESV which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

Closing statement This report has been prepared for and only for the European Commission – DG Energy in accordance with Request for Serv ices ENER/C3/2013-426 under DG ENER's Framework Contract ENER A2 360 -2010 and for no other purpose.

We do not accept or assume any liability or duty of care for any other purpose o r to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

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